1) LEUNG YEE V. F.L STRONG MACHINERY CO. AND WILLIAMSON 37 SCRA 644 FACTS: 1.

First mortgage: Compania Agricola Filipina bought rice-cleaning machinery from the machinery company and this was secured by a chattel mortgage on the machinery and the building to which it was installed. Upon failure to pay, the chattel mortgage was foreclosed, the building and machinery sold in public auction and bought by the machinery company. 2. Days after, the Compania Agricola Filipina executed a deed of sale\ over the land to which the building stood in favor of the machinery company. This was done to cure any defects that may arise in the machinery companys ownership of the building. 3. Second mortgage: on or about the date to which the chattel mortgage was excecuted, Compania executed a real estate mortgage over the building in favor of Leung Yee, distinct and separate from the land. This is to secure payment for its indebtedness for the construction of the building. Upon failure to pay, the mortgage was foreclosed. 4. The machinery company then filed a case, demanding that it be declared the rightful owner of the building. The trial court held that it was the machinery company which was the rightful owner as it had its title before the building was registered prior to the date of registry of Leung Yees certificate. HELD: The building in which the machinery was installed was real property, and the mere fact that the parties seem to have dealt with it separate and apart from the land on which it stood in no wise changed the character as real property. It follows that neither the original registry in the chattel mortgage registry of the instrument purporting to be a chattel mortgage of the building and the machinery installed therein, nor the annotation in the registry of the sale of the mortgaged property, had any effect whatever so far as the building is concerned. 2) STANDARD OIL CO. OF NEW YORK V. JARAMILLO 44 SCRA 630 FACTS: De la Rosa was the lessee of a piece of land, on which a house she owns was built. She executed a chattel mortgage in favor of the petitioner purporting the leasehold interest in the land and the ownership of house. After such, the petitioner moved for its registration with the Register of Deeds, for the purpose of having the same recorded in the book of record of chattel mortgages. After examination, the respondent was in the opinion that the properties were not subjects of a chattel mortgage. HELD: Position taken by the respondent is untenable. His duties are mainly ministerial only in nature and no law confers upon him any judicial or quasi-judicial power. Generally, he should accept the qualification of the property adopted by the person who presents the instrument for

registration and should place the instrument on record, upon payment of the proper fee, leaving the effects of registration to be determined by the court if such question should arise for legal determination. The Civil Code supplies no absolute criterion in discriminating between real property and personal property for purposes of the application of the Chattel Mortgage Law. The articles state general doctrines, nonetheless, it must not be forgotten that under given conditions, property may have character different from that imputed to it in the said articles. It is undeniable that the parties in a contract may by agreement treat as personal property that which by nature would be real property. 3) Evangelista vs. Alto Surety & Insurance Co, G.R. No. L-11139, April 23, 1958 4) ASSOCIATED INSURANCE AND SURETY COMPANY V. IYA, ET. AL 103 SCRA 972 FACTS: Spouses Valino were the owners of a house, payable on installments from Philippine Realty Corporation. To be able to purchase on credit rice from NARIC, they filed a surety bond subscribed by petitioner and therefor, they executed an alleged chattel mortgage on the house in favor of the surety company. The spouses didnt own yet the land on which the house was constructed on at the time of the undertaking. After being able to purchase the land, to be able to secure payment for indebtedness, the spouses executed a real estate mortgage in favor of Iya. The spouses were not able to satisfy obligation with NARIC, petitioner was compelled to pay. The spouses werent able to pay the surety company despite demands and thus, the company foreclosed the chattel mortgage. It later learned of the real estate mortgage over the house and lot secured by the spouses. This prompted the company to file an action against the spouses. Also, Iya filed another civil action against the spouses, asserting that she has a better right over the property. The trial court heard the two cases jointly and it held that the surety company had a preferred right over the building as since when the chattel mortgage was secured, the land wasnt owned yet by the spouses making the building then a chattel and not a real property. HELD: A building certainly cannot be divested of its character of a realty by the fact that the land on which it is constructed belongs to another. To hold it the other way, the possibility is not remote that it would result in confusion, for to cloak the building with an uncertain status made dependent on ownership of the land, would create a situation where a permanent fixture changes its nature or character as the ownership of the land changes hands. In the case at bar, as personal properties may be the only subjects of a chattel mortgage, the execution of the chattel mortgage covering said building is null and void.

5) PRUDENTIAL BANK V. PANIS 153 SCRA 390 FACTS: Spouses Magcale secured a loan from Prudential Bank. To secure payment, they executed a real estate mortgage over a residential building. The mortgage included also the right to occupy the lot and the information about the sales patent applied for by the spouses for the lot to which the building stood. After securing the first loan, the spouses secured another from the same bank. To secure payment, another real estate mortgage was executed over the same properties. The Secretary of Agriculture then issued a Miscellaneous Sales Patent over the land which was later on mortgaged to the bank. The spouses then failed to pay for the loan and the REM was extrajudicially foreclosed and sold in public auction despite opposition from the spouses. The respondent court held that the REM was null and void. HELD: A real estate mortgage can be constituted on the building erected on the land belonging to another. The inclusion of building distinct and separate from the land in the Civil Code can only mean that the building itself is an immovable property. While it is true that a mortgage of land necessarily includes in the absence of stipulation of the improvements thereon, buildings, still a building in itself may be mortgaged by itself apart from the land on which it is built. Such a mortgage would still be considered as a REM for the building would still be considered as immovable property even if dealt with separately and apart from the land. The original mortgage on the building and right to occupancy of the land was executed before the issuance of the sales patent and before the government was divested of title to the land. Under the foregoing, it is evident that the mortgage executed by private respondent on his own building was a valid mortgage. As to the second mortgage, it was done after the sales patent was issued and thus prohibits pertinent provisions of the Public Land Act. 6) SERGS PRODUCTS AND GOQUIOLAY V. PCI LEASING AND FINANCE 338 SCRA 499 FACTS: PCI filed a case for collection of a sum of money as well as a writ of replevin for the seizure of machineries, subject of a chattel mortgage executed by petitioner in favor of PCI. Machineries of petitioner were seized and petitioner filed a motion for special protective order. It asserts that the machineries were real property and could not be subject of a chattel mortgage. HELD: The machineries in question have become immobilized by destination because they are essential and principal elements in the industry, and thus have become immovable in nature. Nonetheless, they are still proper subjects for a chattel mortgage. Contracting parties may validly stipulate that a real property be considered as personal. After agreement, they are consequently estopped from claiming otherwise.

7) MANARANG AND MANARANG V. OFILADA AND ESTEBAN 99 SCRA 108 FACTS: Manarang secured a loan from Esteban guaranteed by a chattel mortgage over a house of mixed materials. Due to failure to pay, the chattel mortgage was foreclosed. Before the sale of the property, Manarang tried to pay for the property but the sheriff refused to accept tender unless there is payment for the publication of the notice of sale in the newspapers. This prompted Manarang to bring this suit to compel the sheriff to accept payment. He averred that the publication was unnecessary as the house should be considered as personal property per agreement in the chattel mortgage, and the publication for notice of sale is unnecessary. HELD: There is no question that a building of mixed materials may be a subject of chattel mortgage, in which case it is considered as between the parties as personal property. The mere fact that a house was the subject of chattel mortgage and was considered as personal property by the parties doesnt make the said house personal property for purposes of the notice to be given for its sale in public auction. It is real property within the purview of Rule 39, Section 16 of the Rules of Court as it has become a permanent fixture on the land, which is real property. 8) Luna v. Encarnacion, 91 Phil. 531 9) TUMALAD V. VICENCIO 41 SCRA 143 FACTS: Vicencio and Simeon executed a chattel mortgage in favor of plaintiffs Tumalad over their house, which was being rented by Madrigal and Company. This was executed to guarantee a loan, payable in one year with a 12% per annum interest. The mortgage was extrajudicially foreclosed upon failure to pay the loan. The house was sold at a public auction and the plaintiffs were the highest bidder. A corresponding certificate of sale was issued. Thereafter, the plaintiffs filed an action for ejectment against the defendants, praying that the latter vacate the house as they were the proper owners. HELD: Certain deviations have been allowed from the general doctrine that buildings are immovable property such as when through stipulation, parties may agree to treat as personal property those by their nature would be real property. This is partly based on the principle of estoppel wherein the principle is predicated on statements by the owner declaring his house as chattel, a conduct that may conceivably stop him from subsequently claiming otherwise. In the case at bar, though there be no specific statement referring to the subject house as personal property, yet by ceding, selling or transferring a property through chattel mortgage could only have meant that defendant conveys the house as chattel, or at least, intended to treat the same as

such, so that they should not now be allowed to make an inconsistent stand by claiming otherwise. 10) Piansuy v David, 12 SCRA 227 (1964) 11) Punzalan Jr. v Lacsamana, 121 SCRA 33 (1983) 12) Navarro v. Reyes, 9 SCRA 631 (1983) 13) MINDANAO BUS COMPANY V. CITY ASSESSOR AND TREASURER 6 SCRA 197 FACTS: Petitioner is engaged in a public utility business, solely engaged in transporting passengers and cargoes by motor trucks, over its authorized lines in Mindanao. It owns a main office and branch offices. To be found in their offices are machineries and equipment, which were assessed by the City Assessor as real properties. HELD: Movable equipments to be immobilized in contemplation of 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. We may here distinguish those movables, which are essential and principal elements of an industry, from those which may not be so considered immobilized by destination because they are merely incidental, not essential and principal. In the case at bar, the tools and equipments in question are by their nature not essential and principal elements of petitioners business of transporting passengers and cargoes by motor trucks. They are merely incidentals. 14) Berkenkotter v. Cu Unjieng, 61 Phil 663 15) DAVAO SAW MILL CO. VS. CASTILLO 61 SCRA 709 FACTS: Petitioner is the holder of a lumber concession. It operated a sawmill on a land, which it doesnt own. Part of the lease agreement was a stipulation in which after the lease agreement, all buildings and improvements would pass to the ownership of the lessor, which would not include machineries and accessories. In connection to this, petitioner had in its sawmill machineries and other equipment wherein some were bolted in foundations of cement. HELD: The machinery must be classified as personal property. The lessee placed the machinery in the building erected on land belonging to another, with the understanding that the machinery was not included in the improvements which would pass to the lessor on the expiration of the lease agreement. The lessee also treated the machinery as personal property in executing chattel

mortgages in favor of third persons. The machinery was levied upon by the sheriff as personalty pursuant to a writ of execution obtained without any protest being registered. Furthermore, machinery only becomes immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a tenant, usufructuary, or any person having temporary right, unless such person acted as the agent of the owner. 16) MAKATI LEASING AND FINANCE CORPORATION V. WEAREVER TEXTILE MILLS 122 SCRA 296 FACTS: To be able to secure financial accommodations from the petitioner, the private respondent discounted and assigned several receivables under a Receivable Purchase Agreement. To secure the collection of the receivables, a chattel mortgage was executed over machinery found in the factory of the private respondent. As the private respondent failed to pay, the mortgage was extrajudicially foreclosed. Nonetheless, the sheriff was unable to seize the machinery. This prompted petitioner to file an action for replevin. The CA reversed the decision of the trial court and ordered the return of the drive motor, after ruling that the machinery may not be the subject of a chattel mortgage, given that it was an immovable under the provisions of Article 415. The same was attached to the ground by means of bolts and the only way to remove it from the plant would be to drill the ground. HELD: There is no logical justification to exclude the rule out that the machinery may be considered as personal property, and subject to a chattel mortgage. If a house may be considered as personal property for purposes of executing a chattel mortgage, what more a machinery, which is movable by nature and becomes immobilized only by destination or purpose, may not be likewise treated as such. 17) 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 included underground tanks, elevated tank, elevated water tanks, water tanks, gasoline pumps, computing pumps, etc. These items are not owned by the lessor of the land wherein the equipment are installed. Upon expiration of the lease agreement, the equipment should be returned in good condition. HELD: The equipment and machinery as appurtenances to the gas station building or shed owned by Caltex and which fixtures are necessary to the operation of the gas station, for without them the gas station would be useless, and which have been attached and fixed permanently to the gas station site or embedded therein, are taxable improvements and machinery within

18) TSAI V. COURT OF APPEALS 336 SCRA 324 FACTS: EVERTEX secured a loan from PBC, guaranteed by a real estate and chattel mortgage over a parcel of land where the factory stands, and the chattels located therein, as included in a schedule attached to the mortgage contract. Another loan was obtained secured by a chattel mortgage over properties with similar descriptions listed in the first schedule. During the date of execution of the second mortgage, EVERTEX purchased machineries and equipment. Due to business reverses, EVERTEX filed for insolvency proceedings. It failed to pay its obligation and thus, PBC initiated extrajudicial foreclosure of the mortgages. PBC was the highest bidder in the public auctions, making it the owner of the properties. It then leased the factory premises to Tsai. Afterwards, EVERTEX sought the annulment of the sale and conveyance of the properties to PBC as it was allegedly a violation of the INSOLVENCY LAW. The RTC held that the lease and sale were irregular as it involved properties not included in the schedule of the mortgage contract. HELD: While it is true that the controverted properties appear to be immobile, a perusal of the contract of REM and CM executed by the parties gives a contrary indication. In the case at bar, both the trial and appellate courts show that the intention was to treat the machineries as movables or personal property. Assuming that the properties were considered immovables, nothing detracts the parties from treating it as chattels to secure an obligation under the principle of estoppel. 19) US V. TAMBUNTING 41 PHIL 364 FACTS: Accused and his wife were accused and later found guilty of stealing gas from the Manila Gas Corporation. It was found out that during their occupancy of the upper portion of a house wherein the corporation was supplying gas, the spouses made an illegal connection so that they could benefit from the supply. HELD: There is nothing in the nature of gas used for illuminating purposes which renders it incapable of being feloniously taken and carried away. It is a valuable article of merchandise bought and sold like other personal property, susceptible of being severed from a mass

20) BOARD OF ASSESSMENT APPEALS V. MANILA ELECTRIC COMPANY 10 SCRA 68 FACTS: City Assessor of QC declared the steel towers for real property tax under Tax Declarations. After denying the respondents petition to cancel these declarations, an appeal was taken with the CTA which held that the steel towers come under the exception of poles under the franchise given to MERALCO; the steel towers are personal properties; and the City Treasurer is liable for the refund of the amount paid. HELD: The steel towers of an electric company dont constitute real property for the purposes of real property tax. MANILA ELECTRIC CO. V. CENTRAL BOARD OF ASSESSMENT APPEALS 114 SCRA 273 FACTS: Petitioner owns two oil storage tanks, made of steel plates wielded and assembled on the spot. Their bottoms rest on a foundation consisted of compacted earth, sand pad as immediate layer, and asphalt stratum as top layer. The tanks merely sit on its foundation. The municipal treasurer of Batangas made an assessment for realty tax on the two tanks, based on the report of the Board of Assessors. MERALCO wished to oppose this assessment as they averred that the tanks are not real properties. HELD: While the two storage tanks are not embodied in the land, they may nevertheless be considered as improvements in the land, enhancing its utility and rendering it useful to the oil industry. For purposes of taxation, the term real property may include things, which should generally be considered as personal property. it is familiar phenomenon to see things classified as real property for purposes of taxation which on general principle may be considered as personal property. 21) Pamintuan v Garcia, 39 Phil 746 (1919)

22) US V. CARLOS 21 PHIL 553 FACTS: Accused was charged with larceny or the unlawful use of electric current. He was found guilty. HELD: It is true that electricity is no longer considered as fluid but its manifestations and effects are like those of gas, may be seen and felt. The true test on whether of what is a proper subject of larceny seems to be not whether the subject is corporeal or not but whether it is capable of appropriation by another than the owner. Electricity, is a valuable article of merchandise, bought and sold like other personal property and is capable of appropriation by another. J. MORELAND, DISSENTING: An electric current is not a tangible thing, a chattel, but is a condition or state on which a thing or chattel finds itself; and that a condition or state cannot be stolen independently of the thing or chattel of which it is a condition or state. That it is chattels, which are subjects of larceny and not conditions. (Electricity is only energy)