Immovable vs.

Movable Properties (Case Digest)

LAUREL VS. ABROGAR,

G.R. NO. 155076, JAN. 13, 2009

Facts:

Philippine Long Distance Telephone Company (PLDT) filed a complaint for theft under Article
308 of the Revised Penal Code against Baynet Co., Ltd. (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.
Kinds of Movable Properties

BICERRA VS. TENEZA,

6 SCRA 649, 651 (1962)

Facts:

Appellants were the owners of the house, worth P200.00, built on land owned by them and
situated in the said municipality Lagangilang; that sometime in January 1957 appealed forcibly
demolished the house, claiming to be the owners thereof; that the materials of the house, after it
was dismantled, were placed in the custody of the barrio lieutenant of the place; and that as a
result of appellant’s refusal to restore the house or to deliver the material appellants the latter
have suffered damages.

Issue:

whether the action involves title to real property.

Held:

A house is classified as immovable property by reason of its adherence to the soil on which it is
built (Art. 415, par. 1, Civil Code). This classification holds true regardless of the fact that the
house may be situated on land belonging to a different owner. But once the house is demolished,
as in this case, it ceases to exist as such and hence its character as an immovable likewise ceases.
 PUNZALAN, JR. V. VDA. DE LACSAMANA,
121 SCRA 331 (1983)

Facts:
Some land belonging to Antonio Punzalan was foreclosed by the Philippine National Bank
Tarlac, Branch in failure of the former to pay the mortgaged fee amounting to P10 grand Since
PNB was the highest bidder, the land went to PNB.

Sometime 1974, while the property was still in the possession of Punzalan, Punzalan constructed
a warehouse on the said land by virtue of the permit secured from the Municipal Mayor of
Bamban, Tarlac. Subsequently, in 1978, a contract of sale was entered into by PNB and
Remedios Vda. De Lacsamana, whom in lieu of the said sale secured a title over the property
involving the warehouse allegedly owned and constructed by the plaintiff.

Punzalan filed a suit for annulment of the Deed of Sale with damages against PNB and
Lacsamana before the Court of First Instance of Rizal, Branch 31, impugning the validity of the
sale of the building, requesting the same to be declared null and void and that damages in the
total sum of P23, 200 more or less be awarded to him.

Respondent Lacsamana in his answer averred the affirmative defense of lack of cause of action
contending that she was a purchaser for value, while, PNB filed a Motion to Dismiss on the
ground of improper venue, invoking that the building was a real property under Article 415 of
the Civil Code, and therefore, Section 4 (a) of the Rules of Court should apply.

Punzalan filed a Motion for Reconsideration asserting that the action he filed is limited to the
annulment of sale and that, it does not involved ownership of or title to property but denied by
the court for lack of merit. A motion for pre-trial was also set by Punzalan but was also denied by
the court invoking that the case was already dismissed.

Hence, a petition for certiorari was filed by the petitioner.

Issue:
Whether or not the judgment rendered by the court is proper.

Held:
While it is true that the petitioner does not directly seek the recovery of the title or possession of
the property in question, his action for annulment of sale and his claim for damages are closely
intertwined with the issue of ownership of the building, which, under the law, is considered
immovable property, the recovery of which is petitioners primary objective. The prevalent
doctrine is that an action for the annulment or rescission of a sale of real property does not
operate to efface the objective and nature of the case, which is to recover said property. It is a
real action. Respondent Court did not err in dismissing the case on the ground of improper venue
under Section 12 Rule 4 which was timely raised under Section 1 Rule 16 of the Rules of Court.
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.
 TSAI VS. CA,
366 SCRA 649,651(1962)

Facts:

Ever Textile Mills, Inc. (EVERTEX) obtained a loan from petitioner Philippine Bank of
Communications (PBCom). As security for the loan, EVERTEX executed in favor of PBCom, 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 granted a second
loan to EVERTEX. The loan was secured by a Chattel Mortgage over personal properties
enumerated in a list attached thereto. The listed properties were similar to those listed in the first
mortgage deed. Due to business reverses, EVERTEX filed insolvency proceedings docketed.
The CFI issued an order on declaring the corporation insolvent. All its assets were taken into the
custody of the Insolvency Court, including the collateral, real and personal, securing the two
mortgages as abovementioned.

Upon EVERTEX’s failure to meet its obligation to PBCom, the latter commenced extrajudicial
foreclosure proceedings against EVERTEX. PBCom was the highest bidder. Thus, PBCom
consolidated its ownership over the lot and all the properties in it and leased the entire factory
premises to petitioner Ruby L. Tsai. PBCom sold the factory, lock, stock and barrel to Tsai,
including the contested machineries. EVERTEX filed a complaint for annulment of sale,
reconveyance, and damages with the Regional Trial Court against PBCom, alleging inter
alia that the extrajudicial foreclosure of subject mortgage was in violation of the Insolvency
Law. EVERTEX claimed that no rights having been transmitted to PBCom over the assets of
insolvent EVERTEX, therefore Tsai acquired no rights over such assets sold to her, and should
reconvey the assets. EVERTEX averred that PBCom, without any legal or factual basis,
appropriated the contested properties, which were not included in the Real and Chattel
Mortgages.

Issue:

Whether or not the foreclosure on after acquired properties of EVERTEX is valid.

Held:

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, which provides in
Section 7 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.” And, since the disputed machineries were acquired in 1981 and could
not have been involved in the 1975 or 1979 chattel mortgages, 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 auction sale of the subject properties to PBCom is void, no valid title
passed in its favor. Consequently, the sale thereof to Tsai is also a nullity under the elementary
principle of nemo dat quod non habet, one cannot give what one does not have

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. 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, as in the
case at bar.
 CALTEX PHIL, INC., VS. CBAA,
May 31, 1992

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
 MERALCO VS. CBAA, May 31, 1982

Facts:

Pursuant to a pipeline concession issued under the Petroleum Act of 1949, Republic Act No. 387,
Meralco Securities installed from Batangas to Manila a pipeline system consisting of cylindrical
steel pipes joined together and buried not less than one meter below the surface along the
shoulder of the public highway. The pipes are embedded in the soil and are firmly and solidly
welded together so as to preclude breakage or damage thereto and prevent leakage or seepage of
the oil. The valves are welded to the pipes so as to make the pipeline system one single piece of
property from end to end.

In order to repair, replace, remove or transfer segments of the pipeline, the pipes have to be cold-
cut by means of a rotary hard-metal pipe-cutter after digging or excavating them out of the
ground where they are buried. In points where the pipeline traversed rivers or creeks, the pipes
were laid beneath the bed thereof. Hence, the pipes are permanently attached to the land.

Pursuant to the Assessment Law, Commonwealth Act No. 470, the provincial assessor of Laguna
treated the pipeline as real property and issued tax declarations, containing the assessed values of
portions of the pipeline.

Meralco appealed the assessments to the defendants, but the latter ruled that pipeline is subject to
realty tax. The defendants argued that the pipeline is subject to realty tax because they are
contemplated in Assessment Law and Real Property Tax Code; that they do not fall within the
category of property exempt from realty tax under those laws; that Articles 415 & 416 of the
Civil Code, defining real and personal property have no applications to this case because these
pipes are constructions adhered to soil and things attached to the land in a fixed manner, and that
Meralco Securities is not exempt from realty tax under petroleum law.

Meralco insists that its pipeline is not subject to realty tax because it is not real property within
the meaning of Art. 415.

Issue:

Whether the aforementioned pipelines are subject to realty tax.

Held:

Yes, the pipelines are subject to realty tax.

Section 2 of the Assessment Law provides that the realty tax is due “on real property, including
land, buildings, machinery, and other improvements.” This provision is reproduced with some
modification in Section 38, Real Property Tax Code, which provides that “there shall be levied,
assessed, and collected xxx annual ad valorem tax on real property such as land, buildings,
machinery, and other improvements affixed or attached to real property xxx.”

It is incontestable that the pipeline of Meralco Securities does not fall within any of the classes of
exempt real property enumerated in section 3 of the Assessment Law and section 40 of the Real
Property Tax Code.

Pipeline means a line of pipe connected to pumps, valves and control devices for conveying
liquids, gases or finely divided solids. It is a line of pipe running upon or in the earth, carrying
with it the right to the use of the soil in which it is placed.

Article 415[l] and [3] provides that real property may consist of constructions of all kinds
adhered to the soil and 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.
The pipeline system in question is indubitably a construction adhering to the soil. It is attached to
the land in such a way that it cannot be separated therefrom without dismantling the steel pipes
which were welded to form the pipeline.

WHEREFORE, the questioned decision and resolution are affirmed. The petition is dismissed.
No costs.
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RIGHTS AS PROPERTY

MBTC V. ALEJO
364 SCRA 812 , 819 (2001)

Facts:
Spouses Raul and Cristina Acampado obtained loans from Metropolitan Bank and Trust
Company in the amounts of 5k and 2k. As security for the payment, Spouses Acampados
executed in favor of the bank a Real Estate Mortgage over a parcel of land registered in their
names. Subsequently a Complaint for Declaration of Nullity of the TCT of the spouses was filed
by Sy Tan Se in the RTC of Valenzuela.
Despite being the mortgagee of the real property, the bank was not made a party to the said civil
case (complaint for declaration of nullity of TCT.) They weren’t notified as well.

The spouses defaulted in the payment of their loan and extrajudicial foreclosure proceedings
were initiated. The bank submitted the highest and winning bid. A certificate of sale was issued
in their favor.
When they were about to get their TCT from the Register of Deeds, petitioner was informed of
the existence of the decision in the aforementioned civil case (complaint for declaration of nullity
of TCT) declaring the Spouses Acampados’s TCT null and void.

The bank filed with the CA a petition for the annulment of the RTC Decision. The CA dismissed
their petition and ruled that the bank should have filed a petition for relief from judgment or an
action for quieting of title.

Issues:
1. Whether or not a petition for annulment of judgment is the proper remedy available to the
bank
2. Whether or not the judgment of the trial court (declaring the Spouses Acampados TCT null
and void) should be declared null and void

Held:
1. Petition for annulment of judgment was the proper remedy available to the bank. It precisely
alleged that Sy Tan Se purposely concealed the case by excluding petitioner as a defendant to the
civil case even if he was an indispensable party. This deprived the bank of its duly registered
property right without due process of the law. The allegation of extrinsic fraud may be the basis
for annulling a judgment.

Petition for relief (what the CA recommended) was not available to the bank since it was never a
party to the civil case.

An action for quieting of the title was also not available to the bank. An action for quieting of
title is filed only when there is a cloud on title to real property or any interest therein. A cloud on
a title is defined as a semblance of title which appears in some legal form but which is in fact
unfounded. The subject judgment cannot be considered as a cloud on petitioner’s title or interest
over the real property covered by TCT, which does not even have a semblance of being a title.

It would not be proper to consider the subject judgment as a cloud that would warrant the filing
of an action to quiet title because to do so would require the court hearing the action to modife or
interfere with the judgment of another co-equal court. Well-entrenched in our jurisdiction is the
doctrine that our court has no power to do so, as that action may lead to confusion and seriously
hinder the administration of justice. Clearly, an action for quieting of title is not an appropriate
remedy in this case.

Bank can’t also intervene to a case that he has no knowledge of.

2. The judgment of the trial court should also be declared null and void because the bank, which
is an indispensable party, was not impleaded in the civil case.

The absence of an indispensable party renders all subsequent actuations of the court null and
void, for want of authority to act, not only as to the absent parties but even as to those present.