Philippine Long Distance Telephone Company (PLDT) filed a complaint for
theft under Article 308 of the Revised Penal Code against Baynet Co., Ltd.
Property 1 (DIGEST)
US V. TAMBUNTING
FACTS:
The Manila Gas Company installed equipment for the transmission of gas
in a house at Evangelista. After the original subscriber left, the apparatus
was sealed and the services discontinued.
Later Mr Tambunting moved in. He was a cheapskate and spliced the
tubing to leech free gas for household use. Alas, the crime was discovered
by the gas company. The prosecutor filed charges and hailed Mr.
Tambunting to court
ISSUE:
Whether or not gas can be the subject of larceny.
HELD:
Yes. Gas is a substance which lends itself to felonious appropriation. It is a
valuable merchandise that can be bought and sold like other personal
property, susceptible of being siphoned from a larger mass and
transported from place to place. Articles 517 and 518 sets parameters for
the theft of gas and it is a valid ordinance.
Laurel v. Abrogar, G.R. No. 155076 (January 13, 2009) Case Digest
Personal Property
Facts:
(Baynet) for stealing its business. PLDT alleged that Baynet offered phone
cards to people in Japan to call their friends and relatives in the
Philippines using PLDT's facilities and equipment.
Issue:
Whether or not the PLDT's business of providing telecommunication
services is a personal property under Article 308 of the Revised Penal
Code.
Held:
No, PLDT's business of providing telecommunication services is not a
personal property under Article 308 of the Revised Penal Code.
Personal property under the Revised Penal Code covers both tangible and
intangible properties but must be considered with the word "take" in the
law. There is "taking" of personal property, and theft is consummated
when the offender unlawfully acquires possession of personal property
even if for a short time; or if such property is under the dominion and
control of the thief. The statutory definition of "taking" clearly indicates
that not all personal properties may be the proper subjects of theft. The
general rule is that only movable properties, which have physical or
material existence and susceptible of occupation by another are proper
subjects of theft. Movable properties under Article 308 of the Revised
Penal Code should be distinguished from the rights or interest to which
they relate to. While the rights or interests are properties, they are not
considered personal properties under Article 308 of the Revised Penal
Code.

PLDT's business is intangible and cannot be taken by another and not the
proper subjects of theft because they are without form or substance.
Berkenkotter v. Cu Unjieng 61 phil 663
Facts: On 26 April 1926, the Mabalacat Sugar Company obtained from Cu
Unjieng e Hijos, a loan secured by a first mortgage constituted on 2
parcels of land "with all its buildings, improvements,sugarcane mill, steel
railway, telephone line, apparatus, utensils and whatever forms part or is
a necessary complement of said sugar-cane mill, steel railway, telephone
line, now existing or that may in the future exist in said lots.”On 5
October 1926, the Mabalacat Sugar Company decided to increase the
capacity of its sugar central by buying additional machinery and
equipment, so that instead of milling 150 tons daily, it could produce 250.
Green proposed to the Berkenkotter, to advance the necessary amount
for the purchase of said machinery and equipment, promising to
reimburse him as soon as he could obtain an additional loan from the
mortgagees, Cu Unjieng e Hijos, and that in case Green should fail to
obtain an additional loan from Cu Unjieng e Hijos, said machinery and
equipment would become security therefore, said Green binding himself
not to mortgage nor encumber them to anybody until Berkenkotter be
fully reimbursed for the corporation's indebtedness to him.
Having agreed to said proposition made in a letter dated 5 October 1926,
Berkenkotter, on 9 October 1926, delivered the sum of P1,710 to Green,
the total amount supplied by him to Green having been P25,750.
Furthermore, Berkenkotter had a credit of P22,000 against said
corporationfor unpaid salary. With the loan of P25,750 and said credit of
P22,000, the Mabalacat Sugar Co., Inc., purchased the additional
machinery and equipment.On 10 June 1927, Green applied to Cu Unjieng
e Hijos for an additional loan of P75,000 offeringas security the additional
machinery and equipment acquired by said Green and installed in the
sugar central after the execution of the original mortgage deed, on 27
April 1927, together with whatever additional equipment acquired with
said loan. Green failed to obtain said loan. Hence, above mentioned
mortgage was in effect.
Issue: Are the additional machines also considered mortgaged?
Held: Article 1877 of the Civil Code provides that mortgage includes all
natural accessions, improvements, growing fruits, and rents not collected
when the obligation falls due, and the amount of any indemnities paid or
due the owner by the insurers of the mortgaged property or byvirtue of
the exercise of the power of eminent domain, with the declarations,
amplifications, and limitations established by law, whether the state
continues in the possession of the person who mortgaged it or whether it
passes into the hands of a third person. It is a rule, that in a mortgage of
real estate, the improvements on the same are included; therefore, all
objects permanently attached to a mortgaged building or land, although
they may have been placed there after the mortgage was constituted, are
also included. (Yes. The installation of a machinery and equipment in a
mortgaged sugar central, in lieu of another of less capacity, for the
purpose of carrying out the industrial functions of the latter and
increasing production, constitutes a permanent improvement on said
sugar central and subjects said machinery and equipment to the
mortgage constituted thereon.)
Philippine Refining Co., Inc. v. Aboitiz & Co., G.R. No. L-41506 (March 25,
1935) Case Digest
Facts:
Philippine Refining Co., Inc., and Francisco Jarque executed three chattel
mortgages on the motor vessels Pandan and Zaragoza, which were
recorded in the record of transfers and incumbrances of vessels for the
port of Cebu. The mortgages had no appended affidavit of good faith
except for the 3rd mortgage, which was not registered in the customs
house within the period of 30 days prior to the start of the insolvency
proceedings against Francisco Jarque.
A fourth mortgage was executed by Francisco Jarque and Ramon Aboitiz
on the motorship Zaragoza and was entered in the chattel mortgage
registry of the register of deeds.
Francisco Jarque was then declared to be an insolvent debtor that
resulted to an assignment of all his properties in favor of Jose Corominas.
Judge Jose M. Hontiveros declined the foreclosure of the mortgages and
sustained the special defenses of fatal defectiveness of the mortgages.
Issue:
Whether or not the mortgages are defective.
Held:
Vessels are considered personal property under the civil law. (Code of
Commerce, article 585.) Similarly under the common law, vessels are
personal property although occasionally referred to as a peculiar kind of
personal property.
Since the term "personal property" includes vessels, they are subject to
mortgage agreeably to the provisions of the Chattel Mortgage Law. (Act
No. 1508, section 2.)
The only difference between a chattel mortgage of a vessel and a chattel
mortgage of other personalty is that it is not now necessary for a chattel
mortgage of a vessel to be noted n the registry of the register of deeds,
but it is essential that a record of documents affecting the title to a vessel
be entered in the record of the Collector of Customs at the port of entry.
Otherwise a mortgage on a vessel is generally like other chattel
mortgages as to its requisites and validity.
A good chattel mortgage according to Section 5 of The Chattell Mortgage
Law, includes the requirement of an affidavit of good faith appended to
the mortgage and recorded therewith. The absence of the affidavit
vitiates a mortgage as against creditors and subsequent encumbrancers.
As a consequence a chattel mortgage of a vessel wherein the affidavit of
good faith required by the Chattel Mortgage Law is lacking, is
unenforceable against third persons.
MINDANAO BUS COMPANY v. THE CITY ASSESSOR & TREASURER and the
BOARD OF TAX APPEALS of Cagayan de Oro City
G.R. No. L-17870 September 29, 1962
FACTS:
Petitioner is a public utility solely engaged in transporting passengers and
cargoes by motor trucks. It owns a land where it maintains and operates a
garage for its TPU motor trucks; a repair shop; blacksmith and carpentry
shops, and with machineries placed therein, its TPU trucks are made;
body constructed; and same are repaired in a condition to be serviceable
in the TPU land transportation business it operates.
The machineries have never been or were never used as industrial
equipment to produce finished products for sale, nor to repair
machineries, parts and the like offered to the general public
indiscriminately for business or commercial purposes.
Respondent City Assessor of Cagayan de Oro City assessed at P4,400
petitioner’s above-mentioned equipment. Petitioner appealed the
assessment to the respondent Board of Tax Appeals on the ground that
the same are not realty. The Board of Tax Appeals of the City sustained
the city assessor, so petitioner herein filed with the Court of Tax Appeals
a petition for the review of the assessment.
The CTA held the petitioner liable to the payment of the realty tax on its
maintenance and repair equipment mentioned above. Hence, this
petition.
ISSUE:
Should the tools and equipment in the petitioner company’s repair shop
be considered immovable taxable real properties?
DOCTRINE:
NO. Movable equipment to be immobilized in contemplation of the law
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.” The tools
and equipment are not essential and principle municipal elements of
petitioner’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. 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.
SERG’S 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 machi eries, subject of a chattel mortgag e
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 b ecome 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.
Serg’s Products, Inc. Vs. PCI Leasing and Finance, Inc. GR No. 137705.
August 22, 2000
Facts:
Respondent PCI Leasing and Finance, Inc, filed with the RTC-QC a
complaint for a sum of money with an application for a writ of replevin.
Respondent Judge issued a writ of replevin directing its sheriff to seize
and deliver the machineries and equipment to PCI after 5 days and upon
the payment of the necessary expenses.
In the implementation of the said writ, the sheriff proceeded to
petitioner’s factory, seized one machinery with word that he would
return for the other.
Petitioners filed a motion for special protective order, invoking the power
of the court to control the conduct of its officers and amend and control
its processes, 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.
The sheriff again sought to enforce the writ of seizure and take
possession of the remaining properties. He was able to take two more,
but was prevented by the workers from taking the rest.
Issue:
1. Whether or not the machineries purchased and imported by Serg’s
became real property by virtue of immobilization.
2. Whether or not the contract between the parties is valid.
Ruling:
The petition is not meritorious.
1. No.
The machines that were subjects of the Writ of seizure were placed by
petitioners in the factory built on their own land. Indisputably, they were
essential and principal elements of their chocolate-making industry.
Hence, although each of them was movable or personal property on its
own, all of them have become immobilized by destination because they
are essential and principal elements in the industry. In that sense
petitioners are correct in arguing that the said machines are real property
pursuant to Article 415 (5) of the Civil Code.
But the Court disagrees with the submission of the petitioners that the
said machines are not proper subject of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a
real property be considered as personal. After agreeing to such
stipulation, they are consequently stopped from claiming otherwise.
Under the principle of estoppels, a party to a contract is ordinarily
precluded from denying the truth of any material fact found therein.
Clearly then, petitioners are stopped from denying the characterization of
the subject machines as personal property. Under circumstances, they
are proper subjects of the Writ of Seizure.
It should be stressed, however, that the Court’s holding-that the
machines should be deemed personal property pursuant to the Lease
Agreement-is good only insofar as the contracting parties are concerned.
Hence, while the parties are bound by the Agreement, third persons
acting in good faith are not affected by its stipulation characterizing the
subject machinery as personal. In any event, there is no showing that any
specific third party would be adversely affected.
2. Yes.
It should be pointed out that the Court may rely on the Lease Agreement,
for nothing on the record shows that it has been nullified or annulled. In
fact, petitioners assailed it first only in the RTC proceedings, which had
ironically been instituted by respondent. Accordingly, it must be
presumed valid and binding as the law between the parties.
Petition denied. Judgment affirmed.
Note:
Article 415. The following are immovable property:
(5) Machinery, receptacles, instruments or implements intended by the
owner of 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.
Serg's v. PCI Leasing
Serg’s Products, Inc. vs. PCI Leasing G.R. No. 137705. August 22, 2000
FACTS:
 PCI Leasing and Finance filed a complaint for sum of money, with
an application for a writ of replevin.
 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 the necessary expenses.
 The sheriff proceeded to petitioner's factory, seized one
machinery, with word that he would return for other
machineries.
 Petitioner (Serg’s Products) filed a motion for special protective
order to defer enforcement of the writ of replevin.
 PCI Leasing opposed the motion on the ground that the
properties were still personal and therefore can still be subjected
to seizure and writ of replevin.
 Petitioner asserted that properties sought to be seized were
immovable as defined in Article 415 of the Civil Code.
 Sheriff was still able to take possession of two more machineries
In its decision on the original action for certiorari filed by the Petitioner,
the appellate court, Citing the Agreement of the parties, held that the
subject machines were personal property, and that they had only been
leased, not owned, by petitioners; and ruled that the "words of the
contract are clear and leave no doubt upon the true intention of the
contracting parties."
ISSUE: Whether or not the machineries became real property by virtue of
immobilization.
Ruling:
Petitioners contend that the subject machines used in their factory were
not proper subjects of the Writ issued by the RTC, because they were in
fact real property.
Writ of Replevin: Rule 60 of the Rules of Court provides that writs of
replevin are issued for the recovery of personal property only.
Article 415 (5) of the Civil Code provides that machinery, receptacles,
instruments or implements intended by the owner of 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
In the present case, the machines that were the subjects of the Writ of
Seizure were placed by petitioners in the factory built on their own
land.They were essential and principal elements of their chocolate-
making industry.Hence, although each of them was movable or personal
property on its own, all of them have become “immobilized by
destination because they are essential and principal elements in the
industry.”
 improvements and buildings introduced and erected by the party of the
However, contracting parties may validly stipulate that a real property be second part shall pass to the exclusive ownership of the lessor without
considered as personal. After agreeing to such stipulation, they are any obligation on its part to pay any amount for said improvements and
consequently estopped from claiming otherwise.Under the principle of buildings; which do not include the machineries and accessories in the
estoppel, a party to a contract is ordinarily precluded from denying the improvements.
truth of any material fact found therein.
In another action wherein the Davao Light & Power Co., Inc., was the
Section 12.1 of the Agreement between the parties provides “The plaintiff and the Davao, Saw, Mill Co., Inc., was the defendant, a judgment
PROPERTY is, and shall at all times be and remain, personal property was rendered in favor of the plaintiff in that action against the defendant;
notwithstanding that the PROPERTY or any part thereof may now be, or a writ of execution issued thereon, and the properties now in question
hereafter become, in any manner affixed or attached to or embedded in, were levied upon as personalty by the sheriff. No third party claim was
or permanently resting upon, real property or any building thereon, or filed for such properties at the time of the sales thereof as is borne out by
attached in any manner to what is permanent.” the record made by the plaintiff herein

The machines are personal property and they are proper subjects of the It must be noted also that on number of occasion, Davao Sawmill treated
Writ of Replevin the machinery as personal property by executing chattel mortgages in
favor of third persons. One of such is the appellee by assignment from
Davao Sawmill v. Castillo the original mortgages.

DAVAO SAW MILL vs. APRONIANO G. CASTILLO and DAVAO LIGHT &
The lower court rendered decision in favor of the defendants herein.
POWER CO., INC. G.R. No. L-40411 August 7, 1935
Hence, this instant appeal.

Facts:
Issue:
Davao Saw Mill Co., Inc., is the holder of a lumber concession from the
Government of the Philippine Islands. However, the land upon which the whether or not the machineries and equipments were personal in
business was conducted belonged to another person. On the land the nature.
sawmill company erected a building which housed the machinery used by
it. Some of the implements thus used were clearly personal property, the Ruling/ Rationale:
conflict concerning machines which were placed and mounted on Yes. The Supreme Court affirmed the decision of the lower court.
foundations of cement. In the contract of lease between the sawmill
company and the owner of the land there appeared the following Machinery which is movable in its nature only becomes immobilized
provision: That on the expiration of the period agreed upon, all the
when placed in a plant by the owner of the property or plant, but not
when so placed by a tenant, a usufructuary, or any person having only a
temporary right, unless such person acted as the agent of the owner.
DAVAO VS CASTILLO 61 PHIL 709
FACTS: Davao Sawmill Co., operated a sawmill. The land upon which the
business was conducted was leased from another person. On the land,
Davao Sawmill erected a building which housed the machinery it used.
Some of the machines were mounted and placed on foundations of
cement. In the contract of lease, Davo Sawmill agreed to turn over free of
charge all improvements and buildings erected by it on the premises with
the exception of machineries, which shall remain with the Davao Sawmill.
In an action brought by the Davao Light and Power Co., judgment was
rendered against Davao Sawmill. A writ of execution was issued and the
machineries placed on the sawmill were levied upon as personalty by the
sheriff. Davao Light and Power Co., proceeded to purchase the machinery
and other properties auctioned by the sheriff.
ISSUE : Are the machineries real or personal property?
HELD : (Art.415) Appellant should have registered its protest before or at
the time of the sale of the property. While not conclusive, the appellant's
characterization of the property as chattels is indicative of intention and
impresses upon the property the character determined by the parties.
Machinery is naturally movable. However, machinery may be immobilized
by destination or purpose under the following conditions: General Rule:
The machinery only becomes immobilized if placed in a plant by the
owner of the property or plant. ▪ Immobilization cannot be made by a
tenant, a usufructuary, or any person having only a temporary right.
Exception: The tenant, usufructuary, or temporary possessor acted as
agent of the owner of the premises; or he intended to permanently give
away the property in favor of the owner. As a rule, therefore, the
machinery should be considered as Personal Property, since it was not
placed on the land by the owner of the said land. DOCTRINE: (Movables
must be placed by the owner (It must be pointed out that Davao Sawmill
should have registered its protest before or at the time of the sale of this
property. It must further be pointed out that while not conclusive, the
characterization of the property as chattels by Davao Sawmill is indicative
of intention and impresses upon the property the character determined
by the parties. In this connection the decision of the court in the case of
Standard Oil vs. Jaramillo, whether obiter dicta or not, furnishes the key
to such a situation. Immobilization of machinery; when placed in plant by
owner Machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the property or
plant, but not when so placed by a tenant, a usufructuary, or any person
having only a temporary right, unless such person acted as the agent of
the owner. The distinction rests upon the fact that one only having a
temporary right to the possession or enjoyment of property is not
presumed by the law to have applied movable property belonging to him
so as to deprive him of it by causing it by an act of immobilization to
become the property of another.) -APPLICATION OF THE PRINCIPLE OF
ESTOPPEL
PRUDENTIAL BANK, petitioner,
vs.
HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court of
First Instance of Zambales and Olongapo City; FERNANDO MAGCALE &
TEODULA BALUYUT-MAGCALE, respondents.
G.R. No. L-50008 August 31, 1987
Facts:
Spouses Magcale secured a loan from Prudential Bank. As security,
respondent’s spouses executed a real estate mortgage, their residential
building as security. Since the respondents was not able to fulfil their
obligation, the security was extrajudiciaily foreclosed and was eventually
sold in a public auction. Hence this case, to assail the validity of the
mortgage and to recover the foreclosed land.
Issue:
Whether or not a real estate mortgage can be instituted on the building
of a land belonging to another
Held:
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.
Prudential Bank v. Panis, G.R. No. 5008 (August 31, 1988) Case Digest
Article 415 of the Civil Code: Real Property
Facts:
The spouses Magcale obtained a Php 70, 000 loan from Prudential Bank
secured by a Deed of Real Estate Mortgage over a 2-storey, semi-
concrete residential building including the right of occupancy on the land.
When the spouses Magcale executed this mortgage, the land still
belonged to the government as the Sales Patent over the lot applied for
by the spouses Magcale was not yet issued.
Issue:
Whether or not a real estate mortgage over a building erected on the
land belonging to another is valid.
Held:
Yes, a real estate mortgage over a building erected on the land belonging
to another is valid.
Article 415 of the Civil Code provides the inclusion of "building" separate
and distinct from the land, which can only mean that a building is by itself
an immovable property.
A mortgage of land necessarily includes buildings unless otherwise
stipulated. A building by itself, however, may be mortgaged apart from
the land on which it has been built. Such a mortgage would still be a real
estate mortgage for the building alone would still be considered an
immovable property.
Caltex Philippines, Inc. v. Board of Assessment Appeals, G.R. No. L-50466
(May 31, 1982) Case Digest
Facts:
Caltex loaned machines and equipment to gas station operators under a
lease agreement, which stipulated that upon demand, the operators shall
return to Caltex the machines and equipment. The lessor of the land
does not become the owner of the machines and equipment. Caltex
retains their ownership.

The City Assessor characterized the said machines and equipment as
taxable realty. However, the City Board of Tax Appeals ruled that they are
personalty. The Assessor appealed to the Central Board of Assessment
Appeals.
The Board held that the said machines are real property within the
meaning of Sec. 3(k) & (m) and 38 of the Real Property Tax Code, PD 464,
and that the Civil Code definitions of real and personal property in
Articles 415 and 416 are not applicable in this case.
Issue:
Whether or not the said machines and equipment are real property
subject to realty tax?
Held:
The said machines and equipment are considered real property.
Section 2 of the Assessment Law provides that the realty tax is due "on
real property, including land, buildings, machinery, and other
improvements" not specifically exempted in section 3 thereof.
This provision is reproduced with some modification in the Real Property
Tax Code which provides:
SEC. 38. Incidence of Real Property Tax.— There shall be levied, assessed
and collected in all provinces, cities and municipalities an annual ad
valorem tax on real property, such as land, buildings, machinery and
other improvements affixed or attached to real property not hereinafter
specifically exempted.
The Code contains the following definitions in its section 3:
k) Improvements — is a valuable addition made to property or an
amelioration in its condition, amounting to more than mere repairs or
replacement of waste, costing labor or capital and intended to enhance
its value, beauty or utility or to adapt it for new or further purposes.
m) Machinery — shall embrace machines, mechanical contrivances,
instruments, appliances and apparatus attached to the real estate. It
includes the physical facilities available for production, as well as the
installations and appurtenant service facilities, together with all other
equipment designed for or essential to its manufacturing, industrial or
agricultural purposes (See sec. 3[f], Assessment Law).
The machines and equipment are necessary to the operation of the gas
station, for without them the gas station would be useless, and which
have been attached or affixed 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.
Therefore, the machines and equipment are real property subject to
realty tax.
CALTEX PHILS. V. CENTRAL BOARD OF ASSESSMENT APPEALS (114 SCRA
296)
FACTS: The City Assessor characterized the items in gas stations of
petitioner as taxable realty. These items includ ed underground tanks,
elevated ta nk, elevated water tanks, water tanks, gasoline pumps,
computing pumps, etc. These items are not owned b y the lessor of the
land wherein t he equipment are installed. Upon ex piration of the lease
agreement, t he 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 im provements and
machinery within the meaning of the Assessment Law and the Real
Property Tax Code.
BENGUET CORPORATION, petitioner, vs. CENTRAL BOARD OF
ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF
ZAMBALES, PROVINCIAL ASSESSOR OF ZAMBALES, PROVINCE OF
ZAMBALES, and MUNICIPALITY OF SAN MARCELINO, respondents.
[January 29, 1993, G.R. No. 106041]
For purposes of taxation the dam is considered as real property
as it comes within the object mentioned in Article 415 of the New Civil
Code, It is a construction adhered to the soil which cannot be separated
or detached without breaking the material or causing destruction on the
land upon which it is attached. The immovable nature of the dam as an
improvement which determines its character as real property, hence
taxable under Section 38 of the Real Property Tax Code.
Issues:
1. Whether or not the tailings dam is subject to realty tax?
2. Whether or not it be considered as immovable property?
HELD:
Yes, it is subject to realty tax and it is considered an immovable property.

Facts:
The petitioner does not dispute that the tailings dam may be
On 1985, Provincial Assessor of Zambales assessed the said properties in
considered realty within the meaning of Article 415. It insists, however,
issue as taxable improvements. The assessment was appealed to the
that the dam cannot be subjected to realty tax as a separate and
Board of Assessment Appeals of the Province of Zambales. However, the
independent property because it does not constitute an "assessable
appeal was dismissed mainly on the ground of the petitioner's failure to
improvement" on the mine although a considerable sum may have been
pay the realty taxes that fell due during the pendency of the appeal.
spent in constructing and maintaining it.
The petitioner elevated the matter to the Central Board of
The Real Property Tax Code does not carry a definition of "real
Assessment Appeals, one of the herein respondents. In its decision dated
property" and simply says that the realty tax is imposed on "real
March 22, 1990, the Board reversed the dismissal of the appeal but,
property, such as lands, buildings, machinery and other improvements
agreed that the tailings dam and the lands submerged thereunder shall
affixed or attached to real property." In the absence of such a definition,
be subject to realty tax.
applying Article 415 of the Civil Code, which states that the following are
considered immovables: Section No. 1 Lands, buildings and constructions
of all kinds adhered to the soil; Section no. 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.
Even without the tailings dam, the petitioner's mining operation
can still be carried out because the primary function of the dam is merely
to receive and retain the wastes and water coming from the mine. There
is no allegation that the water coming from the dam is the sole source of
water for the mining operation so as to make the dam an integral part of
the mine. In fact, as a result of the construction of the dam, the petitioner
can now impound and recycle water without having to spend for the
building of a water reservoir.
And as the petitioner itself points out, even if the petitioner's
mine is shut down or ceases operation, the dam may still be used for
irrigation of the surrounding areas.
From the definitions and the cases cited in relation to this case, it
would appear that whether a structure constitutes an improvement so as
to partake of the status of realty would depend upon the degree of
permanence intended in its construction and use, The expression
"permanent" as applied to an improvement does not imply that the
improvement must be used perpetually but only until the purpose to
which the principal realty is devoted has been accomplished. It is
sufficient that the improvement is intended to remain as long as the land
to which it is annexed is still used for the said purpose.
The Court is convinced that the subject dam falls within the
definition of an "improvement" because it is permanent in character and
it enhances both the value and utility of petitioner's mine. Moreover, the
immovable nature of the dam defines its character as real property under
Article 415 of the Civil Code and thus makes it taxable under Section 38 of
the Real Property Tax Code.
Hence, petition was dismissed by the Supreme Court.
FACTS:
On 1985, Provincial Assessor of Zambales assessed the said properties in
issue as taxable
improvements. The assessment was appealed to the Board of Assessment
Appeals of theProvince of Zambales. However, the appeal was dismissed
mainly on the ground of the petitioner's failure to pay the realty taxes
that fell due during the pendency of the appeal. The petitioner
elevated the matter to the Central Board of Assessment Appeals, one
of the herein respondents. In its decision dated March 22, 1990, the
Board reversed the dismissal of the appeal but, agreed that the tailings
dam and the lands submerged there under shall be subject to realty tax.
For purposes of taxation the dam is considered as real property as it
comes within the object mentioned in Article 415 of the New Civil Code, It
is a construction adhered to the soil which cannot be separated
or detached without breaking the material or causing destruction on the
land upon which it is attached. The immovable nature of the dam as an
improvement which determines its character as real property, hence
taxable under Section 38 of the Real Property Tax Code
Issue:
Whether or not the tailings dam is subject to realty tax?
Whether or not it be considered as immovable property?
Held:
Yes, it is subject to realty tax and it is considered an immovable
property.The petitioner does not dispute that the tailings dam may be
considered realty within themeaning of Article 415. It insists, however,
that the dam cannot be subjected to realty tax as aseparate and
independent property because it does not constitute an "assessable
improvement" onthe mine although a considerable sum may have been
spent in constructing and maintaining it.The Real Property Tax Code does
not carry a definition of "real property" and simplysays that the realty tax
is imposed on "real property, such as lands, buildings, machinery an. Even
without the tailings dam, the petitioner's mining operation can still be
carried out because the primary function of the dam is merely to receive
and retain the wastes and water coming from the mine. There is no
allegation that the water coming from the dam is the sole source of water
for the mining operation so as to make the dam an integral part of the
mine. In fact, as a result of the construction of the dam, the petitioner
can now impound and recycle water without having to spend for the
building of a water reservoir. And as the petitioner itself points out, even
if the petitioner's mine is shut down or ceases operation, the dam may
still be used for irrigation of the surrounding areas, again unlike in the
Ontario case.
By contrast, the tailings dam in question is being used exclusively for the
benefit of the petitioner.
The Court is convinced that the subject dam falls within the definition of
an "improvement" because it is permanent in character and it enhances
both the value and utility of petitioner's mine. Moreover, the immovable
nature of the dam defines its character as real property under Article 415
of the Civil Code and thus makes it taxable under Section 38 of the Real
Property Tax Code.
WHEREFORE, the petition is DISMISSED for failure to show that the
questioned decision of respondent Central Board of Assessment
Appeals is tainted with grave abuse of discretion except as to the
imposition of penalties upon the petitioner which is hereby SET ASIDE
 HOME
 ABOUT
TUMALAD VS. VICENCIO (G.R. NO. L-30173, SEPTEMBER 30, 1971)
APRIL 23, 2015 | YUMMY
FACTS:
1. Some time in 1955, Alberta Vicencio and Emiliano Simeon loaned
4,800 pesos from Gavino and Generosa Tumalad. As guarantee,
they executed a chattel mortgage over their house in Quiapo
which, at that time, was being rented from Madrigal and
Company, Inc.
2. The mortgage was registered in the Registry of Deeds of Manila.
It was also agreed that default in the payment of any of the
amortizations will make the unpaid balance immediately due and
demandable.
3. The defendants-appellants thus defaulted in paying and the
mortgage was extrajudicially foreclosed. The house was
auctioned and bought by the Tumalad’s as the highest bidder.
4. They then commenced an ejectment case in the MTC which ruled
in favor of Tumalad. The defendants-appellants then appealed to
the RTC questioning the legality of the chattel mortgage.
5. While pending, the MTC issued a writ of execution but cannot be
carried because the house has already been demolished 10 days
before pursuant to an order in another ejectment case against
the defendants.
 6. The RTC ruled then in favor of Tumalad and ordered the
defendants to pay the rent. This was appealed to the CA which, in
turn, certified the case to the SC as only questions of law are
involved.
7. Defendants-appellants contend that the chattel mortgage was
void because the subject matter is a house of strong materials
and being an immovable, it can only be the subject of a real
estate mortgage and not a chattel mortgage.
ISSUE: Can defendants claim that the house is an immovable property?
RULING: No.
1. The parties to a contract may, by agreement, treat as personal
property that which by nature would be a real property if it was
so expressly and specifically designated. This is based on the
principle of estoppel.
2. A mortgaged house on a rented land was held to be a personal
property not only because the deed of mortgage considered it as
such but also because it did not form part of the land.
3. It is now settled that an object placed on land by one who had
only a temporary right to the same does not become immobilized
by attachment.
4. In the contract, the house was expressly designated as chattel
mortgage which provides that: “the mortgagor voluntarily cedes,
sells and transfers by way of chattel mortgage…”
5. Although there is no specific statement referring to the house as
personal property, the defendants-appellants could only have
meant to convey the house as chattek or intended to treat the
same as such sk that they should not now be allowed to make an
inconsistent stand by claiming otherwise.
6. Moreover, the subject house stood on a rented lot to which
defendants-appellants merely had a temporary right as lessee,
and although this cannot in itself alone determine the status of
the property, it does so when combined with other factors to
sustain the interpretation of the parties.
7. The SC, however, reversed the decision appealed from on the
ground that the purchaser of the house is not yet entitled, as a
matter of right, to its possession as there is a 1-year period within
which the mortgagor may redeem the property.
8. The period of redemption had not yet expired when action was
instituted in the court of origin. The original complaint stated no
cause of action and was prematurely filed.
Makati Leasing and Finance Corp. vs Wearever Textile
Mills Inc.,
G.R. No. 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 filed a
petition for judicial foreclosure of the properties mortgaged. Acting
on Makati Leasing’s application for replevin, the lower court issued
a writ of seizure. Pursuant thereto, the sheriff enforcing the seizure
order and removed the main motor of the subject machinery. In a
petition for certiorari and prohibition, the Court of Appeals ordered
the return of the machinery on the ground that the same cannot be
the subject of replevin because it is a real property pursuant to
Article 415 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 textile’s plant would be to drill out or destroy the concrete
floor. 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 or not the machinery in suit is real or personal property
from the point of view of the parties.
Held:
The said machinery is a personal property. Like what was involved
in the Tumalad case, if a house of strong materials, may be
considered as personal property for purposes of executing a chattel
mortgage thereon, as long as the parties 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. The decision of the Court of
Appeals was set aside and the order of the lower court was
reinstated.
Makati Leasing vs. Wearever Textile
Facts:
Wearever Textile in order to obtain a financial accommodation from
Makati Leasing, discounted and assigned several receivables with the
former under a Receivable Purchase Agreement. To secure the collection
of the receivables assigned, Waerever executed a Chattel Mortgage over
certain raw materials inventory as well as a machinery described as an
Artos Aero Dryer Stentering Range.
Upon Wearever's default, Makati Leasing filed a petition for extrajudicial
foreclosure of the properties mortgage to it. However, the Deputy Sheriff
assigned to implement the foreclosure failed to gain entry into
Wearever's premises and was not able to effect the seizure of the
machinery. Makati Leasing thereafter filed a complaint for judicial
foreclosure with the CFI Rizal.
RTC then issued a writ of seizure, the enforcement of which was
restrained upon Wearever's filing of a motion for reconsideration. finally
issued on 11 February 1981, an order to break open the premises of
Wearever to enforce said writ.
The sheriff enforcing the seizure order, repaired to the premises of
Wearever and removed the main drive motor of the subject machinery.
CA set aside the orders of the RTC and ordered the return of the drive
motor seized by the sheriff after ruling that the machinery in suit cannot
be the subject of replevin, much less of a chattel mortgage, because it is a
real property pursuant to Article 415 of the new Civil Code. CA also
rejected the argument that Wearever is estopped from claiming that the
machine is real property by constituting a chattel mortgage thereon. A
motion for reconsideration was filed by Makati Leasing, but it was denied.
Hence this petition.
Issue:
Whether the machinery in suit is real or personal property?
Held:
If a house of strong materials, like what was involved in the above
Tumalad case, may be considered as personal property for purposes of
executing a chattel mortgage thereon as long as the parties 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 denying the existence of the chattel mortgage.
It must be pointed out that the characterization of the subject machinery
as chattel by the private respondent is indicative of intention and
impresses upon the property the character determined by the parties. As
stated in Standard Oil Co. of New York vs. 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 real property, as long as
no interest of third parties would be prejudiced thereby.
Santos Evangelista v. Alto Surety and Insurance Co., Inc.G.R. No. L-
11139, April 23, 1958, 103 Phil. 401
Concepcion, J.
FACTS:On June 4, 1949, Santos Evangelista instituted a civil case for a sum
of money.On the same date, he obtained a writ of attachment, which was
levied upon a house,built by Rivera on a land situated in Manila and
leased to him. In due course, judgment was rendered in favor of
Evangelista, who bought the house at public auction held incompliance
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 on May 10, 1952, a definite deed of sale of the same house
had been issued to Alto Surety, as the highest bidder at an auction sale
held. Hence, Evangelista instituted an action against Alto Surety and
Ricardo Rivera, for the purpose of establishing his title over said house,
and 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, P40.00 a month from October, 1952,
until said delivery, plus costs.
ISSUE: Whether or not a house constructed by the lessee of the land on
which it is built, should be dealt with, for purposes of attachment, as
immovable property or as personal property.
HELD: The house is not personal property, much less a debt, credit or
other persona lproperty not capable of manual delivery, but immovable
property. As explicitly held, in Ladera vs. Hodges (48 OG 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 a
usufructuary or lessee. The opinion that the house of Rivera should have
been attached in accordance with subsection (c) of said section 7, as
"personal property capable of manual delivery, by taking and safely
keeping in his custody", for it declared that "Evangelista could not have
validly purchased Ricardo Rivera's house from the sheriff as the latter was
not in possession thereof at the time he sold it at a public auction” is
untenable.
Tsai v. CA
October 2, 2001
FACTS:
Ever Textile Mills, Inc. (EVERTEX) obtained loan from Philippine
Bank of Communications (PBCom), secured by a deed of Real and Chattel
Mortgage over the lot where its factory stands, and the chattels located
therein as enumerated in a schedule attached to the mortgage contract.
PBCom again granted a second loan to EVERTEX which was secured by a
Chattel Mortgage over personal properties enumerated in a list attached
thereto. These listed properties were similar to those listed in the first
mortgage deed. After the date of the execution of the second mortgage
mentioned above, EVERTEX purchased various machines and
equipments. Upon EVERTEX's failure to meet
its obligation to PBCom, the latter commenced extrajudicial foreclosure
proceedings against EVERTEX under Act 3135 and Act 1506 or "The
Chattel Mortgage Law". PBCom then consolidated its ownership over the
lot and all the properties in it. It leased the entire factory premises to
Ruby Tsai and sold to the same the factory, lock, stock and barrel
including the contested machineries.
EVERTEX filed a complaint for annulment of sale, reconveyance,
and damages against PBCom, alleging inter alia that the extrajudicial
foreclosure of subject mortgage was not valid, and that PBCom, without
any legal or factual basis, appropriated the contested properties which
were not included in the Real and Chattel Mortgage of the first mortgage
contract nor in the second contract which is a Chattel Mortgage, and
neither were those properties included in the Notice of Sheriff's Sale.
ISSUES:
1) W/N the contested properties are personal or movable properties
2) W/N the sale of these properties to a third person (Tsai) by the bank
through an irregular foreclosure sale is valid.
HELD:
1) Nature of the Properties and Intent of the Parties
The nature of the disputed machineries, i.e., that they were heavy, bolted
or cemented on the real property mortgaged does not make them ipso
facto immovable under Article 415 (3) and (5) of the New Civil Code.
While it is true that the properties appear to be immobile, a perusal of
the contract of Real and Chattel Mortgage executed by the parties herein
reveal their intent, that is - to treat machinery and equipment as
chattels.
In the first mortgage contract, reflective of the true intention of PBCOM
and EVERTEX was the typing in capital letters, immediately following the
printed caption of mortgage, of the phrase "real and chattel." So also, the
"machineries and equipment" in the printed form of the bank had to be
inserted in the blank space of the printed contract and connected with
the word "building" by typewritten slash marks. Now, then, if the
machineries in question were contemplated to be included in the real
estate mortgage, there would have been no necessity to ink a chattel
mortgage specifically mentioning as part III of Schedule A a listing of the
machineries covered thereby. It would have sufficed to list them as
immovables in the Deed of Real Estate Mortgage of the land and building
involved. As regards the second contract, the intention of the parties is
clear and beyond question. It refers solely to chattels. The inventory list
of the mortgaged properties is an itemization of 63 individually described
machineries while the schedule listed only machines and 2,996,880.50
worth of finished cotton fabrics and natural cotton fabrics.
UNDER PRINCIPLE OF STOPPEL
Assuming arguendo that the properties in question are immovable by
nature, nothing detracts the parties from treating it as chattels to secure
an obligation under the principle of estoppel. As far back as Navarro v.
Pineda, an immovable may be considered a personal property if there is a
stipulation as when it is used as security in the payment of an obligation
where a chattel mortgage is executed over it.
2) Sale of the Properties Not Included in the Subject of Chattel Mortgage is
Not Valid
The auction sale of the subject properties to PBCom is void. Inasmuch as
the subject mortgages were intended by the parties to involve chattels,
insofar as equipment and machinery were concerned, the Chattel
Mortgage Law applies. Section 7 provides thereof that: "a chattel
mortgage shall be deemed to cover only the property described therein
and not like or substituted property thereafter acquired by the mortgagor
and placed in the same depository as the property originally mortgaged,
anything in the mortgage to the contrary notwithstanding." Since the
disputed machineries were acquired later after the two mortgage
contracts were executed, it was consequently an error on the part of the
Sheriff to include subject machineries with the properties enumerated in
said chattel mortgages.
As the lease and sale of said personal properties were irregular and illegal
because they were not duly foreclosed nor sold at the auction, no valid
title passed in its favor. Consequently, the sale thereof to Ruby Tsai is
also a nullity under the elementary principle of nemo dat quod non habet,
one cannot give what one does not have.
BURGOS, SR. V. CHIEF OF STAFF, AFP [133 SCRA 800; G.R. NO. 64261; 26
DEC 19
Facts: Petitioners assail the validity of 2 search warrants issued on
December 7, 1982 by respondent Judge Cruz-Pano of the then Court of
First Instance of Rizal, under which the premises known as No. 19, Road
3, Project 6, Quezon City, and 784 Units C & D, RMS Building, Quezon
Avenue, Quezon City, business addresses of the "Metropolitan Mail" and
"We Forum" newspapers, respectively, were searched, and office and
printing machines, equipment, paraphernalia, motor vehicles and other
articles used in the printing, publication and distribution of the said
newspapers, as well as numerous papers, documents, books and other
written literature alleged to be in the possession and control of petitioner
Jose Burgos, Jr. publisher-editor of the "We Forum" newspaper, were
seized. As a consequence of the search and seizure, these premises were
padlocked and sealed, with the further result that the printing and
publication of said newspapers were discontinued. Respondents contend
that petitioners should have filed a motion to quash said warrants in the
court that issued them before impugning the validity of the same before
this Court. Respondents also assail the petition on ground of laches
(Failure or negligence for an unreasonable and unexplained length of
time to do that which, by exercising due diligence, could or should have
been done earlier. It is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to
assert it either has abandoned it or declined to assert it). Respondents
further state that since petitioner had already used as evidence some of
the documents seized in a prior criminal case, he is stopped from
challenging the validity of the search warrants.
Petitioners submit the following reasons to nullify the questioned
warrants:
1. Respondent Judge failed to conduct an examination under oath or
affirmation of the applicant and his witnesses, as mandated by the above-
quoted constitutional provision as well as Sec. 4, Rule 126 of the Rules of
Court.
2. The search warrants pinpointed only one address which would be the
former abovementioned address.
3. Articles belonging to his co-petitioners were also seized although the
warrants were only directed against Jose Burgos, Jr.
4. Real properties were seized.
5. The application along with a joint affidavit, upon which the warrants
were issued, from the Metrocom Intelligence and Security Group could
not have provided sufficient basis for the finding of a probable cause
upon which a warrant may be validly issued in accordance with Section 3,
Article IV of the 1973 Constitution.
Respondents justify the continued sealing of the printing machines on the
ground that they have been sequestered under Section 8 of Presidential
Decree No. 885, as amended, which authorizes sequestration of the
property of any person engaged in subversive activities against the
government in accordance with implementing rules and regulations as
may be issued by the Secretary of National Defense.
Issue: Whether or Not the 2 search warrants were validly issued and
executed.
Held: In regard to the quashal of warrants that petitioners should have
initially filed to the lower court, this Court takes cognizance of this
petition in view of the seriousness and urgency of the constitutional Issue
raised, not to mention the public interest generated by the search of the
"We Forum" offices which was televised in Channel 7 and widely
publicized in all metropolitan dailies. The existence of this special
circumstance justifies this Court to exercise its inherent power to suspend
its rules. With the contention pertaining to laches, the petitioners gave an
explanation evidencing that they have exhausted other extra-judicial
efforts to remedy the situation, negating the presumption that they have
abandoned their right to the possession of the seized property.
On the enumerated reasons:
1. This objection may properly be considered moot and academic, as
petitioners themselves conceded during the hearing on August 9, 1983,
that an examination had indeed been conducted by respondent judge of
Col. Abadilla and his witnesses.
2. The defect pointed out is obviously a typographical error. Precisely,
two search warrants were applied for and issued because the purpose
and intent were to search two distinct premises. It would be quite absurd
and illogical for respondent judge to have issued two warrants intended
for one and the same place.
3. Section 2, Rule 126, of the Rules of Court, does not require that the
property to be seized should be owned by the person against whom the
search warrant is directed. It may or may not be owned by him.

4. Petitioners do not claim to be the owners of the land and/or building
on which the machineries were placed. This being the case, the
machineries in question, while in fact bolted to the ground, remain
movable property susceptible to seizure under a search warrant.
5. The broad statements in the application and joint affidavit are mere
conclusions of law and does not satisfy the requirements of probable
cause. Deficient of such particulars as would justify a finding of the
existence of probable cause, said allegation cannot serve as basis for the
issuance of a search warrant and it was a grave error for respondent
judge to have done so. In Alvarez v. Court of First Instance, this Court
ruled that "the oath required must refer to the truth of the facts within
the personal knowledge of the petitioner or his witnesses, because the
purpose thereof is to convince the committing magistrate, not the
individual making the affidavit and seeking the issuance of the warrant, of
the existence of probable cause." Another factor which makes the search
warrants under consideration constitutionally objectionable is that they
are in the nature of general warrants. The description of the articles
sought to be seized under the search warrants in question are too
general.
With regard to the respondents invoking PD 885, there is an absence of
any implementing rules and regulations promulgated by the Minister of
National Defense. Furthermore, President Marcos himself denies the
request of military authorities to sequester the property seized from
petitioners. The closure of the premises subjected to search and seizure is
contrary to the freedom of the press as guaranteed in our fundamental
law. The search warrants are declared null and void.
G.R. Nos. L-10817-18 February 28, 1958
ENRIQUE LOPEZ, petitioner,
vs.
VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.
Facts:
After agreeing to make an investment in Orosa’s theatre business and his
assurance that he would be personally liable for any account that the said
construction might incur, Lopez delivered the lumber which was used for
the construction of the Plaza Theatre. But of the total cost of the
materials amounting to P62,255.85, Lopez was paid only P20848.50.
Plaza Theatre was erected on a piece of land formerly owned by Orosa,
and was acquired by the corporation. As Lopez was pressing Orosa for
payment of remaining unpaid obligation, the latter promised to obtain a
bank loan by mortgaging the properties of Plaza Theatre. Unknown to
Lopez, the corporation already got a loan from a bank with Luzon Surety
Company as surety, and the corporation in turn executed a mortgage on
the land and building in favor of said company as counter-security.
Persistent demand from Lopez caused Orosa to execute an alleged “deed
of assignment” of his 480 shares of stock of Plaza Theatre, at P100 per
share; and as the obligation still remain unsettled, Lopez filed a complaint
against Orosa and Plaza Theatre Inc, praying that xxx in case defendants
fail to pay, the building and land owned by corporation be sold at public
auction, or the shares of the capital stock be sold, and the proceeds
thereof be applied to said indebtedness.
As a defense, Orosa contended that the shares of stocks were personal
properties and cannot be made to cover and satisfy the obligation. it was
thus prayed that he be declared exempted from payment of deficiency in
case the proceeds from the sale of properties are not enough.
The surety company, upon discovery that the land was already registered,
file a petition to annotate the rights and interests of the surety company
over the said properties, which was opposed by Lopez who asserted that
he has preferred lien over the properties.
The two cases were heard jointly, and lower court held that Orosa were
liable for the unpaid balance of the cost of lumber used in the
construction, and Lopez thus acquired materialman’s lien over it. In
making the pronouncement that tyhe lien was merely confined to the
building and did not extend to the land where it was built, the trial jduge
took into consideration that xxx codal provisions specifying that refection
credits are preferred could refer to buildings which are also classified as
real properties upon which the refaction was made. Orosa were thus
required to xxx with respect tohe building, said mortgage was subject to
materialmen’s lien in favor of Lopez.
Lopez tried to secure a modification of decision in so far as it declared
that lien did not extend to the land, but was denied by court. Hence, the
appeal.
Issue:
Whether a materialmen’s lien for the value of materials used in the
construction of building attaches to said structure alone, and does not
extend to the land on which building is adhered to.
Held:
Yes. Such lien attaches to structure alone, and does not extend to the
land where the building is.
In view of employment of the phrase, “real estate or immovable
property”, and in as much as said provision does not contain any
specification delimiting the lien to the building, said article must be
construed as to embrace both the land and building or the structure
adhering thereto. SC cannot subscribe to this view, for while it is true
that real estate connotes land and building constructed thereon, it is
obvious that the inclusion of the building, separate and distinct from the
land, in the enumeration of what may constitute real properties could
mean only one thing – that the building is by itself an immovable
property. Moreover, in view of the absence of any specific provision of
law 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.
A close examination of the provision of the Civil Code reveals that the law
gives preference to unregistered refectionary credits only with respect to
the real estate upon the refection or work was made. The conclusion is
that it 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 construction of the building attaches only to said
structure and to no other property of the obligors.
Wherefore, and on the strength of the foregoing considerations, the
decision appealed from is hereby affirmed, with costs against appellant. It
is so ordered.
Yap vs. Tañada
Facts:
The case began in the City Court of Cebu with the filing by Goulds Pumps
International (Phil.), Inc. (Goulds for brevity) of a complaint against Yap
and his wife, seeking recovery of P1,459.30 representing the balance of
the price and installation cost of a water pump in the latter's premises.
The City Court ruled in favor of Goulds and ordered Yap to pay the former
the sum of P1,459.30 with interest at the rate of 12% per annum until
fully paid.
Yap appealed to the Court of First Instance. The appeal was assigned to
the sala of respondent Judge Tañada. Tañada affirmed the decision of
the City Court. A writ of execution was issued. With this, the Sheriff
levied on the water pump in question and scheduled the execution sale.
The said property was sold to Goulds as the highest bidder.

Yap filed his petition for review before the Supreme Court.
Issue:
Whether or not the pump installed had become immovable property by
its being installed in his residence.
Held:
The Court ruled on the negative. The Civil Code considers as immovable
property, among others, anything "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." The pump does not
fit this description. It could be, and was in fact separated from Yap's
premises without being broken or suffering deterioration. Obviously the
separation or removal of the pump involved nothing more complicated
than the loosening of bolts or dismantling of other fasteners.
Machinery & Engineering Supplies, Inc. v. Court of Appeals
G.R. No. L-7057. October 29, 1954.
Concepcion, J.:
Doctrine: Said machinery and equipment were "intended by the owner of
the tenement for an industry" carried on said immovable and tended
"directly to meet the needs of said industry." For these reasons, they
were already immovable pursuant to paragraph 3 and 5 of Article 415 of
Civil Code.
Facts: Petitioner filed a complaint for replevin in the CFI of Manila against
Ipo Limestone Co., Inc. and Dr. Antonio Villarama for the recovery of the
machineries and equipments sold and delivered to defendants at their
factory in Bigti, Norzagaray, Bulacan. Respondent judge issued order for
Provincial Sheriff to seize and take immediate possession of the
properties. But the equipment could not possibly be dismantled without
causing damage to the wooden frames attached to them. As Roco, pet's
president, insisted in dismantling it on his own responsibility, alleging that
bond was posted for such, the deputy sheriffs directed that some of the
supports thereof be cut. Defendant filed counter-bond. Trial court
ordered return and reinstallation of machineries. Petitioner deposited
them along the road, near the quarry of the defendant without
reinstallation rendering them useless. Petitioner complains that the
respondent Judge had disregarded his manifestation that equipments
seized are the Petitioner's property until fully paid for and as such never
became immovable and ordinarily replevin may be brought to recover
any specific personal property unlawfully taken or detained from the
owner thereof, provided such property is capable of identification and
delivery; but replevin will not lie for the recovery of real property or
incorporeal personal property.
Issue: W/N the equipment can be seized by the sheriff?
Ruling: When the sheriff repaired to the premises of respondent, Ipo
Limestone Co., Inc., the machinery and equipment in question appeared
to be attached to the land, particularly to the concrete foundation of said
premises, in a fixed manner, in such a way that the former could not be
separated from the latter "without breaking the material or deterioration
of the object." Hence, in order to remove said outfit, it became necessary,
not only to unbolt the same, but, also, to cut some of its wooden
supports. Moreover, said machinery and equipment were "intended by
the owner of the tenement for an industry" carried on said immovable
and tended "directly to meet the needs of the said industry." For these
reasons, they were already immovable property pursuant to paragraphs 3
and 5 of Article 415 of Civil Code of the Philippines, which are
substantially identical to paragraphs 3 and 5 of Article 334 of the Civil
Code of Spain. As such immovable property, they were not subject to
replevin.
that it is a chattel. By express declaration of the parties in the contract,
appellants are estopped from claiming otherwise. However, this is good
only insofar as the contracting parties are concerned. With respect to
third persons who are not parties to the contract, the house is considered
as immovable property.

PROPERTY - Conrado P. Navarro vs. Rufino Pineda, et al.G.R. No. L –

18456 – November 30, 1963, 9 SCRA 631
Facts: Defendant-appellants, Rufino Penida and his mother Juana
Gonzales, borrowed a sum of money payable on or before June 14, 1960
to the plaintiff Conrado Navarro. As a security, Rufino executed a “Deed
of Real Estate and Chattel Mortgage”. In the said mortgage his mother, by
way of Real Estate Mortgage pledge a parcel of land belonging to her.
Rufino, on the other hand, executed a Chattel mortgage of his two storey
residential house made of G.I. sheet roofing, “sawali’ walls and wooden
posts, and a truck. The said mortgages are contained in one document,
and were duly registered. However, the house was erected on the land of
Attorney Vicente Castro. After two extensions they failed to pay their
obligation.

Issue: Whether or Not, a house erected on a land that belongs to a third

person may be the subject of a chattel mortgage.

Ruling: That the property subject of the controversy is a chattel since it

was built on a rented land that belongs to another. As such, it does not
become immobilized by attachment, so as to make it a real property.
Moreover, the stipulation of the parties expressly states in the document