Baes v CA & RP GR 108065 (July 6, 1993)

Posted on August 10, 2013

Spouses Felix Baes & Rafaela Baes v CA and Republic of the Philippines
GR 108065
July 6, 1993
FACTS
ISSUE
WON Baes owned Lot 1-B.
HELD
Art. 461, NCC
River beds abandoned through NATURAL CHANGE ipso facto belong to owner
whose lands are occupied by the new course in proportion to the are lost. Owners of
the land adjoining the river bed have the right to acquire by paying its value (must
not exceed value of new beds area)
If change is due to concessioners authorized by the Government, the concession
may be granted to concessioners. No grant = land belongs to owners of land
covered by the waters. Must not prejudice tge superior rights of third persons with
sufficient title.
If a riparian owner is entitled to compensation for damage/loss due to
natural reasons, there is no reson not to compensate when the change
was effected through artificial means.
The loss was caused by a deliberate act of Government. The Government is obliged
to compensate Baes for the loss.
However, Baes has already been compensated through the fair exchange of lots
between him and the Government.
Posted in Avulsion, Case Digests | Tagged Accession, Avulsion, CA, Felix
Baes, July 1993, July 6,ownership, Property, Rafaela Baes | Leave a reply
Elias Villuga, et al v NLRC and Broad Street Tailoring GR No. L-70538
August 23, 1993
Posted on August 3, 2013
Elias Villuga, et al v NLRC and Broad Street Tailoring
August 23, 1993
L-70538

HELD:
Rule 1, Section 2(c), Book III of the Implementing Rules of Labor Code,
provides the Elements of Membership of a Managerial Staff:
(1) that his primary duty consists of the performance of workdirectly related to
management policies;
(2) that he customarily and regularly exercises discretion and independent
judgment in the performance of his functions;
(3) that he regularly and directly assists in the management of theestablishment;
and
(4) that he does not devote his twenty per cent of his time to work other than those
described above.
Villugas primary work or duty is to cut or prepare patterns for items to be sewn.
The duty to lay down/implement any of the management policies lies in their
manager and assistant manager. While he distributes and assigns work to
employees in the absence of the manager & the assistant manager, the duty is only
occasional. Also, Villuga does not participate in policy-making. Rather, his positions
functions involve execution of approved and established policies.
In Franklin Baker Company of the Philippines v. Trajano, employees who do not
participate in policy-making but are given ready policies to execute and standard
practices to observe are not managerial employees.
Villuga is definitely a rank and file employee hired to perform the work of the cutter
and not hired to perform supervisory or managerial functions. The fact that he is
uniformly paid by the month does not exclude him from the benefits
of holiday pay. He should also be paid in addition to the 13th month pay,
his overtime pay, holiday pay, premium pay for holiday and rest day, and service
incentive leave pay.
For abandonment to constitute a valid cause for dismissal, there must be a
deliberate and unjustified refusal of the employee to resume his employment. Mere
absence is not sufficient, it must be accompanied by overt acts unerringly pointing
to the factthat the employee simply does not want to work anymore. 8 At any rate,
dismissal of an employee due to hisprolonged absence without leave by reason of
illness duly established by the presentation of a medical certificate is not justified. 9
In the case at bar, however, considering that petitioner Villuga absented himself for
four (4) dayswithout leave and without submitting a medical certificate to support
his claim of illness, the imposition of a sanctionis justified, but surely, not dismissal,
in the light of the fact that this is petitioners first offense. In lieu ofreinstatement,
petitioner Villuga should be paid separation pay where reinstatement can no longer
be effected inview of the long passage of time or because of the realities of the
situation. 10 But petitioner should not be grantedbackwages in addition to
reinstatement as the same is not just and equitable under the circumstances
consideringthat he was not entirely free from blame.

As to the other eleven petitioners, there is no clear showing that they were
dismissed because the circumstancessurrounding their dismissal were not even
alleged. However, we disagree with the finding of respondentCommission that the
eleven petitioners are independent contractors.
For an employer-employee relationship to exist, the following elements are
generally considered: (1) the selectionand engagement of the employee; and
engagement of the employee;
(2) the payment of wages; (3) the power of dismissal and (4) the power to control
the employees conduct.
The mere fact that petitioners were paid on a piece-rate basis is no argumentthat
herein petitioners were not employees. The term wage has been broadly defined
in Article 97 of the LaborCode as remuneration or earnings, capable of being
expressed in terms of money whether fixed or ascertained on atime, task, piece or
commission
basis. . . . The facts of this case indicate that payment by the piece is just a
method of compensation and does notdefine the essence of the
relation. 13 The petitioners were allowed to perform their work at home does not
likewise imply absence of controland supervision. The control test calls merely for
the existence of a right to control the manner of doing the work, not the actual
exercise of the right.
In determining whether the relationship is that of employer and employee or one of
an independent contractor,each case must be determined on its own facts and all
the features of the relationship are to be considered. 15Considering that
petitioners who are either sewers, repairmen or ironer, have been in the employ of
privaterespondent as early as 1972 or at the latest in 1976, faithfully rendering
services which are desirable or necessaryfor the business of private respondent,
and observing managements approved standards set for their respectivelines of
work as well as the customers specifications, petitioners should be considered
employees, not independentcontractors.
Independent contractors are those who exercise independent employment,
contracting to do a piece of workaccording to their own methods and without being
subjected to control of their employer except as to the result oftheir work. By the
nature of the different phases of work in a tailoring shop where the customers
specifications mustbe followed to the letter, it is inconceivable that the workers
therein would not be subjected to control.befollowed to the letter, it is inconceivable
that the workers therein would not be subjected to control.
In Rosario Brothers, Inc. v. Ople, 16 this Court ruled that tailors and similar workers
hired in the tailoring department,although paid weekly wages on piece work basis,
are employees not independent contractors. Accordingly, asregular employees, paid
on a piece-rate basis, petitioners are not entitled to overtime pay, holiday pay,
premium payfor holiday/rest day and service incentive leave pay. Their claim for
separation pay should also be defined for lack ofevidence that they were in fact

dismissed by private respondent. They should be paid, however, their 13th

monthpay under P.D. 851, since they are employees not independent contractors.
Posted in Case Digests, Labor Standards | Tagged Elias Villuga, Labor
Standards | Leave a reply
Luis Marcos Laurel v Hon. Zeus Abrogar
Posted on June 29, 2013
Luis Marcos Laurel vs Hon. Zeus Abrogar
GR No. 155076
January 13, 2009
FACTS
Laurel was charged with Theft under Art. 308 of the RPC for allegedly taking,
stealing, and using PLDT's international long distance calls by conducting
International Simple Resale (ISR) a method of outing and completing international
long-distance calls using lines, cables, antennae, and/or air wave frequency which
connect directly to the local/domestic exchange facilities of the country where the
call is destined. PLDT alleged that this service was stolen from them using their
own equipment and caused damage to them amounting to P20,370,651.92.
PLDT alleges that the international calls and business of providing
telecommunication or telephone service are personal properties capable of
appropriation and can be objects of theft.
ISSUE
WON Laurel's act constitutes Theft
HELD
Art.308, RPC: Theft is committed by any person who, with intent to
gain but without violence against, or intimidation of persons nor force upon
things, shall take personal property of another without the latters consent.
Elements of Theft under Art.308, RPC:
1. There be taking of Personal Property;
2. Said Personal Property belongs to another;
3. Taking be done with Intent to Gain;
4. Taking be done without the owners consent;
5. No violence against, or intimidation of, persons or force upon things
Personal Property anything susceptible of appropriation and not included in
Real Property

Thus, the term personal property as used in Art.308, RPC should be interpreted
in the context of the Civil Code's definition of real and personal property.
Consequently, any personal property, tangible or intangible, corporeal or
incorporeal, capable of appropriation may be the subject of theft (*US v Carlos; US v
Tambunting; US v Genato*), so long as the same is not included in the enumeration
of Real Properties under the Civil Code.
The only requirement for personal property to capable of theft, is that it be subject
to appropriation.
Art. 416 (3) of the Civil Code deems Forces of Nature which are brought under
the control of science, as Personal Property.
The appropriation of forces of nature which are brought under control by science
can be achieved by tampering with any apparatus used for generating or measuring
such forces of nature, wrongfully redirecting such forces of nature from such
apparatus, or using any device to fraudulently obtain such forces of nature.
In the instant case, the act of conducting ISR operations by illegally connecting
various equipment or apparatus to PLDTs telephone system, through which
petitioner is able to resell or re-route international long distance calls using PLDTs
facilities constituteSubtraction.
Moreover, interest in business should be classified as personal property since it is
capable of appropriation, and not included in the enumeration of real properties.
Therefore, the business of providing telecommunication or telephone service are
personal property which can be the object of theft under Art. 308 of the RPC. The
act of engaging in ISR is an act of subtraction penalized under the said article.
While international long-distance calls take the form of electrical energy and may be
considered as personal property, the said long-distance calls do not belong to PLDT
since it could not have acquired ownership over such calls. PLDT merely encodes,
augments, enhances, decodes and transmits said calls using its complex
communications infrastructure and facilities.
Since PLDT does not own the said telephone calls, then it could not validly claim
that such telephone calls were taken without its consent.
What constitutes Theft is the use of the PLDT's communications facilities without
PLDT's consent. The theft lies in the unlawful taking of the telephone services &
businesses.
The Amended Information should be amended to show that the property subject of
the theft were services and business of the offended party.

Posted in Case Digests, Criminal Law II, Movable Property vs Real

Property, Property | Tagged 2009,Article 308, forces of nature, GR
155076, Hon. Zeus Abrogar, January 13, January 2009, Luis Marcos
Laurel, personal property, PLDT, RPC, Subtraction, Theft | Leave a reply
Makati Leasing and Finance Corp., vs Wearever Textile Mills, Inc.,
Posted on June 29, 2013
Makati Leasing and Finance Corp., vs Wearever Textile Mills, Inc.,
122 SCRA 296
GR No. L-58469
May 16, 1983
FACTS
Wearever Textile Mills, Inc. executed a chattel mortgage contract in favor of Makati
Leasing and Finance Corporation covering certain raw materials and machinery.
Upon default, Makati Leasing fi led a petition for judicial foreclosure of the
properties mortgaged. Acting on Makati Leasings application for replevin, the lower
court issued a writ of seizure. Pursuant thereto, the sheriff enforcing the seizure
order seized the machinery subject matter of the mortgage. In a petition for
certiorari and prohibition, the Court of Appeals ordered the return of the machinery
on the ground that the same can-not be the subject of replevin because it is a real
property pursuant to Article415 of the new Civil Code, the same being attached to
the ground by means of bolts and the only way to remove it from Wearever textiles
plant would be to drill out or destroy the concrete fl oor. When the motion for
reconsideration of Makati Leasing was denied by the Court of Appeals, Makati
Leasing elevated the matter to the Supreme Court.
ISSUE
Whether the machinery in suit is real or personal property from the point of view of
the parties.
HELD
There is no logical justification to exclude the rule out the present case from the
application of the pronouncement in Tumalad v Vicencio, 41 SCRA 143. If a house
of strong materials, like what was involved in the Tumalad case, may be
considered as personal property for purposes of executing a chattel
mortgage thereon as long as theparties to the contract so agree and no innocent
third party will be prejudiced thereby, there is absolutely no reason why a
machinery, which is movable in its nature and becomesimmobilized only by
destination or purpose, may not be likewise treated as such. This is really
because one who has so agreed is estopped from the denying the existence
of the chattel mortgage.

In rejecting petitioners assertion on the applicability of the Tumalad doctrine, the

CA lays stress on the fact that the house involved therein was built on a land that
did not belong to the owner of such house. But the law makes no distinction
with respect to the ownership of the land on which the house is built and
We should not lay down distinctions not contemplated by law.
It must be pointed out that the characterization by the private respondent is
indicative of the intention and impresses upon the property the character
determined by the parties. As stated in Standard Oil Co. of New York v. Jaramillo, 44
Phil. 630, it is undeniable that the parties to a contract may, by agreement, treat as
personal property that which by nature would be a real property as long as no
interest of third parties would be prejudiced thereby.
The status of the subject matter as movable or immovable property was not raised
as an issue before the lower court and the CA, except in a supplemental
memorandum in support of the petition filed in the appellate court. There is no
record showing that the mortgage has been annulled, or that steps were taken to
nullify the same. On the other hand, respondent has benefited from the said
contract.
Equity dictates that one should not benefit at the expense of another.
As such, private respondent could no longer be allowed to impugn the efficacy of
the chattel mortgage after it has benefited therefrom.
Therefore, the questioned machinery should be considered as personal property.
Posted in Case Digests, Movable Property vs Real Property, Property
| Tagged 122 SCRA 296, 1983, GR L-58469, Makati Leasing and Finance
Corp, May 16, May 1983, movable property, personal
property,Property, Wearever Textile Mills | Leave a reply
Caltex vs Central Board of Assessment Appeals
Posted on June 24, 2013
Caltex vs Central Board of Assessment Appeals & City Assessor of Pasay
GR No. L-50466
May 31, 1982
This case is about the realty tax on machinery and equipment installed by Caltex
(Philippines) Inc., in its gas stations located on leased land.
FACTS
Caltex loaned machines and equipment to gas station operators under an
appropriate lease agreement or receipt. The lease contract stipulated that upon

demand, the operators shall return to Caltex the machines and equipment in good
condition as when received, ordinary wear and tear excepted.
The lessor of the land, where the gas station is located, does not become the owner
of the machines and equipment installed therein. Caltex retains the ownership
thereof during the term of the lease.
The City Assessor of Pasay City characterized the said items of gas station
equipment and machinery 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 on June 3, 1977 that the said machines are real property within the
meaning of Ses. 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
WON the pieces of gas station equipment and machinery permanently affixed by
Caltex to its gas station and pavement should be subject to realty tax.
HELD
Sec.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 Sec.3 thereof.
Sec.3 of the Real Property Tax Code provides the following definitions:

k) Improvements a valuable addition made to property or an amelioration in

its conditionmore than mere repairs or replacement of wasteintended to
enhance its value, beauty, or utility

m) Machinery machines, mechanical contrivances, instruments, appliances,

and apparatus attached to the real estateincludes the physical facilities
available for productioninstallation and appurtenant service facilities.

The subject machines and equipment are taxable improvement and machinery
within the meaning of the Assessment Law and the Real Property Tax Code, because
the same are necessary to the operation of the gas station and have been
attached/affixed/embedded permanently to the gas station site.
Improvements on land are commonly taxed as realty even though they
might be considered personalty. It is a familiar phenomenon to see things
classified as real property for purposes of taxation which on general principle might
be considered personal property (Standard Oil Co., vs Jaramillo, 44 PHIL 630).

This case is also easily distinguishable from Board of Assessment Appeals vs. Manila
Electric Co., (119 Phil. 328) where Meralco's steel towers were exempted from
taxation. The steel towers were considered personalty because they were attached
to square metal frames by means of bolts and could be moved from place to place
when unscrewed and dismantled.
Nor are Caltex's gas station equipment and machinery the same as the tools and
equipment in the repair shop of a bus company which were held to be personal
property not subject to realty tax (Mindanao Bus Co. vs. City Assessor, 116 Phil.
501).
The Central Board of Assessment Appeals did not commit a grave abuse of
discretion in upholding the City Assessor's imposition of the realty tax on Caltex's
gas station and equipment.
Posted in Case Digests, Movable Property vs Real Property, Property
| Tagged 1982, Caltex vs Central Board of Assessment Appeals, L50466, May 1982, May 31, movable property, personal property, real
property, Real Property Tax, realty tax | Leave a reply
Mindanao Bus Company vs City Assessor
Posted on June 24, 2013
Mindanao Bus Company vs City Assessor
116 PHIL 501
GR No. L-17870
September 29, 1962
FACTS
The City Assessor of Cagayan de Oro City assessed a realty tax on several
equipment and machineries of Mindanao Bus Co. These equipment were placed on
wooden or cement platforms and can be moved around in the bus companys repair
shop. The bus company appealed the assessment to the Board of Tax Appeals on
the ground that the same are not realty. The Board of Tax Appeals of the City,
however, sustained the city assessor. Thus, the bus company appealed to the Court
of Tax Appeals, which likewise sustained the city assessor.
HELD
Art. 415 of the NCC classifies the following as immovable property:
xxx
(5) Machinery, receptacles, instruments or implements intended by the owner pf 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;
Note that the stipulation expressly states that the equipment are placed on wooden
or cement platforms. They can be moved around and about in petitioner's repair
shop.
Before movables may be deemed immobilized in contemplation of Article 415 (5), it
is necessary that they 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.
In this case, the tools and equipment in question are by their nature, not essential
and principal elements of Mindanao Bus Co.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. Even without
such tools and equipments, its business may be carried on.
Aside from the element of essentiality the Art.415 (5) also requires that the industry
or works be carried on in a building or on a piece of land. A sawmill would also be
installed in a building on land more or less permanently, and the sawing is
conducted in the land/building.
However, in the instant case, the equipments in question are destined only to repair
or service the transportation business, which is not carried on in a building or
permanently on a piece of land, as demanded by law. The equipments in question
are not absolutely essential to the petitioner's transportation business, and
petitioner's business is not carried on in a building, tenement or on a specified land.
As such, the equipments in question are not deemed real property because the
transportation business is not carried on in a building or permanently on a piece of
land, as demanded by law.
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.
Therefore, the imposition of realty tax on the maintenance and repair equipment
was not proper because the properties involved were not real property under Article
415 (5).
Posted in Case Digests, Movable Property vs Real Property, Property
| Tagged 116 PHIL 501, 1962,Article 415, Cagayan de Oro City, Case
Digest, City Assesor, Civil Code, equipment, immovable property,L17870, machines. property, Mindanao Bus Company, movable
property, personal property, Property Case Digest, Property cases, real
property, realty tax, September 1962, September 29 | Leave a reply

Leung Yee vs Strong Machinery Co

Posted on June 22, 2013
Leung Yee vs Strong Machinery Co.
37 PHIL 644
GR No. L-11658
February 15, 1918
FACTS
The Compania Agricola Filipina (CAF) purchased from Strong Machinery Co. rice
cleaning machines which CAF installed in one of its buildings.
As security for the purchase price, CAF executed a chattel mortgage on
the machines and the building on which they had been installed.
When CEF failed to pay, the registered mortgage was foreclosed and Strong
Machinery Co. purchased the building. This sale was annotated in the Chattel
Mortgage Registry.
Later, Strong Machinery Co. also purchased from Agricola the lot on which the
building was constructed. The sale wasn't registered in the Registry of Property
BUT Strong Machinery Co. took possession of the building and the lot.
However, the same building had been previously purchased by Leung Yee, a creditor
ofAgricola, at a sheriff's sale despite his knowledge of the prior sale in favor
of Strong Machinery Co.. The sale to Leung Yee was registered in the Registry of
Property.
ISSUES
1. Was the property's nature changed by its registration in the Chattel Mortgage
Registry?
2. Who has a better right to the property?
HELD
1. Where the interest conveyed is of the nature of real property, the placing of the
document on record in the Chattel Mortgage Registry is a futile act.
Chattel Mortgage refers to the mortgage of Personal Property executed in
the manner and form prescribed in the statute.
Since the building is REAL PROPERTY, its sale as annotated in the Chattel
Mortgage Registry cannot be given the legal effect of registration in the Registry of
Real Property.
The mere fact that the parties decided to deal with the building as personal
property does not change its character as real property.
Neither the original registry in the chattel mortgage registry, nor the annotation in
said registry of the sale of the mortgaged property had any effect on the building.

1. Art. 1473 of the New Civil Code provides the following rules on determining
ownership of property which has been sold to different vendees:

If Personal Property grant ownership to person who 1st possessed it

in good faith

If Real Property grant ownership to person who 1st recorded it in the

Registry

If no entry grant to person who 1st possessed in good faith

If no proof of possession grant to person who presents oldest title
Since Leung Yee purchased the property despite knowledge of the previous
purchase of the same by Strong Machinery Co., it follows that Leung Yee was not a
purchaser in good faith.
One who purchases real estate with knowledge of a defect or lack of title in his
vendor cannot claim that he has acquired title thereto in good faith as against the
true owner of the land or of an interest therein. The same rule must be applied to
one who has knowledge of facts which should have put him upon such inquiry and
investigation as might be necessary to acquaint him with the defects in the title of
his vendor.
Good Faith, or the want of it, is a state or condition of mind which can only
be judged of by actual or fancied tokens or signs. (Wilder vs. Gilman, 55Vt.,
504, 505; Cf. Cardenas Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton
Bros. Co. vs. Bromley, 119Mich., 8, 10, 17.)
Honesty Of Intention is the honest lawful intent constituting good faith. It
implies afreedom from knowledge and circumstances which ought to put a
person on inquiry.
As such, proof of such knowledge overcomes the presumption of good faith.
Following the rule on possessory rights provided in Art. 1473, Strong Machinery
Co. has a better right to the property since it first purchased the same ahead of
Leung Yee, the latter not being a purchaser in good faith.
Posted in Case Digests, Movable Property vs Real Property, Property
| Tagged 1918, 37 PHIL 644, Article 1473, building, Case Digest, chattel
mortgage, Chattel Mortgage Registry, Civil Code, February 15, good
faith, GR L-11658, honesty of intention, Leung Yee, New Civil Code, oldest
titles, personal property,possessor in good faith, possessory
rights, Property, Property Case Digest, Property cases, property
right, purchaser in good faith, real property, real property
regostration, registration, Strong Machinery Co | Leave a reply

Board of Assessment Appeals QC v MERALCO

Posted on June 22, 2013
Board of Assessment Appeals, Q.C. vs Meralco
10 SCRA 68
GR No. L-15334
January 31, 1964
FACTS
On November 15, 1955, the QC City Assessor declared the MERALCO's steel towers
subject to real property tax. After the denial of MERALCO's petition to cancel these
declarations, an appeal was taken to the QC Board of Assessment Appeals, which
required respondent to pay P11,651.86 as real property tax on the said steel towers
for the years 1952 to 1956.
MERALCO paid the amount under protest, and filed a petition for review in the Court
of Tax Appeals (CTA) which rendered a decision ordering the cancellation of the said
tax declarations and the refunding to MERALCO by the QC City Treasurer of
P11,651.86.
ISSUE
Are the steel towers or poles of the MERALCO considered real or personal
properties?
HELD
Pole long, comparatively slender, usually cylindrical piece of wood, timber, object
of metal or the like; an upright standard to the top of which something is affixed or
by which something is supported.
MERALCO's steel supports consists of a framework of 4 steel bars/strips which are
bound by steel cross-arms atop of which are cross-arms supporting 5 high-voltage
transmission wires, and their sole function is to support/carry such wires. The
exemption granted to poles as quoted from Part II, Par.9 of respondent's franchise
is determined by the use to which such poles are dedicated.
It is evident that the word poles, as used in Act No. 484 and incorporated in the
petitioner's franchise, should not be given a restrictive and narrow interpretation, as
to defeat the very object for which the franchise was granted. The poles should be
taken and understood as part of MERALCO's electric power system for the
conveyance of electric current to its consumers.
Art. 415 of the NCC classifies the following as immovable property:
(1) Lands, buildings, roads and constructions of all kinds adhered to the soil;
xxx

(3) Everything attached to an immovable in a fixed manner, in such a way that it

cannot be separated therefrom without breaking the material or deterioration of the
object;
xxx
(5) Machinery, receptacles, instruments or implements intended by the owner pf the
tenement for an industry ot works which may be carried on in a building or on a
piece of land, and which tend directly to meet the needs of the said industry or
works;
Following these classifications, MERALCO's steel towers should be considered
personal property. It should be noted that the steel towers:
(a) are neither buildings or constructions adhered to the soil;
(b) are not attached to an immovable in a fixed manner they can be separated
without breaking the material or deterioration of the object;
are not machineries, receptacles or instruments, and even if they are, they are
not intended for an industry to be carried on in the premises.
Posted in Case Digests, Movable Property vs Real Property, Property
| Tagged 10 SCRA 68, 1964, Act No 484, Art. 415, Article 415, Board of
Assessment Appeals QC v MERALCO, buildings, case
digests,constructions, immovable property, January 1964, January 31, L15334, lands, machinery, MERALCO,movable property, New Civil
Code, personal property, poles, Proper cases, Property case
digests,Quezon City, real property, real vs personal property, steel
poles, steel towers | Leave a reply
Pastor Ago v CA
Posted on June 21, 2013
Pastor D. Ago vs CA, Hon. Montao Ortiz, The Provincial Sheriff of Surigao,
and Grace Park Engineering, Inc.
GR No. L-17898
October 31, 1962
FACTS
Ago bought sawmill machineries and equipments from Grace Park Engineer
Domineering, Inc. (GPED) A chattel mortgage was executed over the said properties
to secure the unpaid balance of P32,000, which Ago agreed to pay in installment
basis.
Because Ago defaulted in his payment, GPED instituted extra-judicial foreclosure
proceedings of the mortgage. To enjoin the foreclosure, Ago instituted a special civil

case in the CFI of Agusan. The parties then arrived at a compromise agreement.
However, a year later, Ago still defaulted in his payment. GPED filed a motion for
execution with the lower court, which was executed on September 23, 1959.
Acting upon the writ of execution, the Provincial Sheriff of Surigao levied upon and
ordered the sale of the sawmill machineries and equipment.
Upon being advised that the public auction sale was set on December 4, 1959, Ago
filed a petition for certiorari and prohibition on December 1, 1959 with the CA. He
alleged that his counsel only received the copy of the judgment on September 25,
1959 two days after the execution of the writ; that the order of sale of the levied
properties was in grave abuse of discretion and in excess of jurisdiction; and
that the Sheriff acted illegally by levying the properties and attempting to sell them
without prior publication of the notice of sale thereof in some newspaper of general
circulation as required by the Rules of Court.
The CA issued a writ of preliminary injunction against the Sheriff, but it turned out
that the properties were already sold on December 4, 1959. The CA ordered the
Sheriff to suspend the issuance of the Certificate of Sale until the decision of the
case. The CA then rendered its decision on November 9, 1960.
ISSUES
1. Is the fact that petitioner was present in open court as the judgment was
rendered, sufficient notice of the said judgment?
2. Was the Sheriff's sale of the machineries and equipment at a public auction valid
despite lack of publication of the notice of sale?
HELD
1) No. The mere pronouncement of the judgment in open court does not constitute
a rendition of judgment.
The filing of the judge's signed decision with the Clerk of Court constitutes the
rendition of a valid and binding judgment.
Sec. 1, Rule 35 of the Rules of Court require that all judgments be rendered in
writing, personally and directly prepared by the judge, and signed by him,
stating clearly and distinctly the facts and the law on which it is based,
filed with the clerk of the court.
Prior to the filing, the decision could still be subject to amendment and change and
may not constitute the real judgment of the court.
Moreover, the hearing of the judgment in open court does not constitute valid
notice thereof. No judgment can be notified to the parties unless it has previously
been rendered.
Sec.7 of Rule 27 expressly requires that final orders or judgments be served
either personally or by registered mail.
The signed judgment not having been served upon the petitioner, said judgment
could not be effective upon him who had not received it. As a consequence, the

issuance of the writ of execution is null and void, having been issued before
petitioner was served a copy of the decision, personally or by registered mail.
2) The subject sawmill machineries and equipment became real estate properties in
accordance with the provision of Art. 415 (5) of the NCC:
ART. 415 The following are immovable property:
xxxx
(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;
The installation of the sawmill machineries in the building of Gold Pacific Sawmill,
Inc., for use in the sawing of logs carried on in the said building converted them
into Real Properties as they became a necessary & permanent part of the building
or real estate on which the same was constructed.
And if they are judicially sold on execution without the necessary advertisement of
sale by publication in a newspaper as required in Sec.16 of Rule 39 of the Rules
of Court, the sale made by the sheriff would be null and void.
Posted in Case Digests, Movable Property vs Real Property, Property
| Tagged 1962, Article 415, CA,chattel mortgage, Civil
Code, foreclosure, Grace Park Engineer Domineering inc, immovable
property, L-17898, machinery, Montao Ortiz, movable
property, notice, notice of judgment, October 1962, October 31, open
court, Pastor Ago, Pastor Ago v CA, Pastor D. Ago, Provincial Sheriff of
Surigao, real property,Rules of Court, Sec1 Rule 35, Section 7 Rule
27, Surigao | Leave a reply
Davao Sawmill Co. vs Castillo
Posted on June 21, 2013
Davao Sawmill Co. vs Castillo
61 PHIL 709
GR No. L-40411
August 7, 1935
A tenant placed machines for use in a sawmill on the landlord's land.
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 of the New Civil Code provides that Real Property consists of:
(1) Lands, buildings, roads and constructions of all kinds adhered to the soil;
xxx
(5) Machinery, receptacles, instruments or implements intended by the owner pf the
tenement for an industry ot works which may be carried on in a building or on a
piece of land, and which tend directly to meet the needs of the said industry or
works;
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.