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US vs Tambunting

Facts: This appeal was instituted for the purpose of reversing a judgment of
the Court of First Instance of the city of Manila, finding the accused, Manuel
Tambunting, guilty of stealing a quantity of gas belonging to the Manila Gas
Corporation, and sentencing him to undergo imprisonment for two months
and one day, of arresto mayor, with the accessories prescribed by law; to
indemnify the said corporation in the sum of P2, with subsidiary
imprisonment in case of insolvency; and to pay the costs.
The evidence submitted in behalf of the prosecution shows that in January of
the year 1918, the accused and his wife became occupants of the upper floor
of the house situated at No. 443, Calle Evangelista, in the city of Manila. In
this house the Manila Gas Corporation had previously installed apparatus for
the delivery of gas on both the upper and lower floors, consisting of the
necessary piping and a gas meter, which last mentioned apparatus was
installed below. When the occupants at whose request this installation had
been made vacated the premises, the gas company disconnected the gas
pipe and removed the meter, thus cutting off the supply of gas from said
premises.
Upon June 2, 1919, one of the inspectors of the gas company visited the
house in question and found that gas was being used, without the knowledge
and consent of the gas company, for cooking in the quarters occupied by the
defendant and his wife: to effect which a short piece of iron pipe had been
inserted in the gap where the gas meter had formerly been placed, and piece
of rubber tubing had been used to connect the gas pipe of rubber tubing had
been used to connect the gas pipe in kitchen with the gas stove, or plate,
used for cooking.
At the time this discovery was made, the accused, Manuel Tambunting, was
not at home, but he presently arrived and admitted to the agent to the gas
company that he had made the connection with the rubber tubing between
the gas pipe and the stove, though he denied making the connection below.
He also admitted that he knew he was using gas without the knowledge of
the company and that he had been so using it for probably two or three
months.
Issue: WON gas can be considered in larceny?
Held: Yes. Gas can be considered in larceny, for the very reason that it is
considered as property being able to be capable of appropriation. Thus
having monetary value. There was evidence before the court showing that
the general average of the monthly bills paid by consumers throughout the
city for the use of gas in a kitchen equipped like that used by the accused is

from P18 to 20, while the average minimum is about P8 per month. We think
that the facts above stated are competent evidence; and the conclusion is
inevitable that the accused is at least liable to the extent of the minimum
charge of P2 per month. The market value of the property at the time and
place of the theft is of court the proper value to be proven (17 R.C.L., p. 66);
and when it is found that the least amount that a consumer can take costs P2
per months, this affords proof that the amount which the accused took was
certainly worth that much. Absolute certainty as to the full amount taken is of
course impossible, because no meter wad used; but absolute certainty upon
this point is not necessary, when it is certain that the minimum that could
have been taken was worth a determinable amount.
Berkenkotter vs Cu Unjieng
Facts: that on April 26, 1926, the Mabalacat Sugar Co., Inc., owner of the
sugar central situated in Mabalacat, Pampanga, obtained from the
defendants, Cu Unjieng e Hijos, a loan secured by a first mortgage
constituted on two parcels and land "with all its buildings, improvements,
sugar-cane mill, steel railway, telephone line, apparatus, utensils and
whatever forms part or is necessary complement of said sugar-cane mill,
steel railway, telephone line, now existing or that may in the future exist is
said lots."
On October 5, 1926, shortly after said mortgage had been constituted, the
Mabalacat Sugar Co., Inc., decided to increase the capacity of its sugar
central by buying additional machinery and equipment. The estimated cost of
said additional machinery and equipment was approximately P100,000. In
order to carry out this plan, B.A. Green, president of said corporation,
proposed to the plaintiff, B.H. 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, the herein defendants Cu Unjieng e Hijos. Having agreed to
said proposition made in a letter dated October 5, 1926 (Exhibit E), B.H.
Berkenkotter, on October 9th of the same year, delivered the sum of P1,710
to B.A. Green, president of the Mabalacat Sugar Co., Inc., the total amount
supplied by him to said B.A. Green having been P25,750. Furthermore, B.H.
Berkenkotter had a credit of P22,000 against said corporation for 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 now in
litigation.
On June 10, 1927, B.A. Green, president of the Mabalacat Sugar Co., Inc.,
applied to Cu Unjieng e Hijos for an additional loan of P75,000 offering as
security the additional machinery and equipment acquired by said B.A.
Green and installed in the sugar central after the execution of the original

mortgage deed, on April 27, 1927, together with whatever additional


equipment acquired with said loan. B.A. Green failed to obtain said loan.
The appellant contends that the installation of the machinery and equipment
claimed by him in the sugar central of the Mabalacat Sugar Company, Inc.,
was not permanent in character inasmuch as B.A. Green, in proposing to him
to advance the money for the purchase thereof, made it appear in the letter,
Exhibit E, that in case B.A. Green should fail to obtain an additional loan from
the defendants Cu Unjieng e Hijos, said machinery and equipment would
become security therefor, said B.A. Green binding himself not to mortgage
nor encumber them to anybody until said plaintiff be fully reimbursed for the
corporation's indebtedness to him.
Upon acquiring the machinery and equipment in question with money
obtained as loan from the plaintiff-appellant by B.A. Green, as president of
the Mabalacat Sugar Co., Inc., the latter became owner of said machinery
and equipment, otherwise B.A. Green, as such president, could not have
offered them to the plaintiff as security for the payment of his credit.
Issue: WON the installation of machinery constitutes a real property or a
personal property?
Held: Real Property. For the foregoing considerations, we are of the opinion
and so hold: (1) That 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 (article
1877, Civil Code); (2) that the fact that the purchaser of the new machinery
and equipment has bound himself to the person supplying him the purchase
money to hold them as security for the payment of the latter's credit, and to
refrain from mortgaging or otherwise encumbering them does not alter the
permanent character of the incorporation of said machinery and equipment
with the central; and (3) that the sale of the machinery and equipment in
question by the purchaser who was supplied the purchase money, as a loan,
to the person who supplied the money, after the incorporation thereof with
the mortgaged sugar central, does not vest the creditor with ownership of
said machinery and equipment but simply with the right of redemption.
Philippine Refining Co Inc vs Jarque
Facts: Coming now to the merits, it appears that on varying dates the
Philippine Refining Co., Inc., and Francisco Jarque executed three
mortgages on the motor vessels Pandan and Zaragoza. These documents
were recorded in the record of transfers and incumbrances of vessels for the

port of Cebu and each was therein denominated a "chattel mortgage".


Neither of the first two mortgages had appended an affidavit of good faith.
The third mortgage contained such an affidavit, but this mortgage was not
registered in the customs house until May 17, 1932, or within the period of
thirty days prior to the commencement of insolvency proceedings against
Francisco Jarque; also, while the last mentioned mortgage was subscribed
by Francisco Jarque and M. N. Brink, there was nothing to disclose in what
capacity the said M. N. Brink signed. 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 on May 12,
1932, or again within the thirty-day period before the institution of insolvency
proceedings. These proceedings were begun on June 2, 1932, when a
petition was filed with the Court of First Instance of Cebu in which it was
prayed that Francisco Jarque be declared an insolvent debtor, which soon
thereafter was granted, with the result that an assignment of all the
properties of the insolvent was executed in favor of Jose Corominas.
On these facts, Judge Jose M. Hontiveros declined to order the foreclosure
of the mortgages, but on the contrary sustained the special defenses of fatal
defectiveness of the mortgages. In so doing we believe that the trial judge
acted advisedly.
Issue: WON vessel should be considered as personal property?
Held: Yes. 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. (Reynolds vs. Nielson [1903], 96 Am. Rep., 1000; Atlantic
Maritime Co vs. City of Gloucester [1917], 117 N. E., 924.) 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.)
Indeed, it has heretofore been accepted without discussion that a mortgage
on a vessel is in nature a chattel mortgage. (McMicking vs. Banco EspaolFilipino [1909], 13 Phil., 429; Arroyo vs. Yu de Sane [1930], 54 Phil., 511.)
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. (Rubiso
and Gelito vs. Rivera [1917], 37 Phil., 72; Arroyo vs. Yu de Sane, supra.)
Otherwise a mortgage on a vessel is generally like other chattel mortgages
as to its requisites and validity. (58 C.J., 92.)
The Chattell Mortgage Law in its section 5, in describing what shall be
deemed sufficient to constitute a good chattel mortgage, 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. (Giberson vs. A. N.
Jureidini Bros. [1922], 44 Phil., 216; Benedicto de Tarrosa vs. F. M. Yap Tico
& Co. and Provincial Sheriff of Occidental Negros [1923], 46 Phil., 753.) 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.

4. That these machineries are sitting on cement or wooden platforms


as may be seen in the attached photographs which form part of this
agreed stipulation of facts;
That these machineries have never been or were never used as industrial
equipments 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 for which petitioner has never engaged in, to date.

Mindanao Bus Company vs City Assessor


Facts: Petitioner and respondents, thru their respective counsels
agreed to the following stipulation of facts:
1. That petitioner is a public utility solely engaged in transporting
passengers and cargoes by motor trucks, over its authorized lines in
the Island of Mindanao, collecting rates approved by the Public
Service Commission;
3. That the machineries sought to be assessed by the respondent as
real properties are the following:
(a) Hobart Electric Welder Machine, appearing in the
attached photograph, marked Annex "A";
(b) Storm Boring Machine, appearing in the attached
photograph, marked Annex "B";
(c) Lathe machine with motor, appearing in the attached
photograph, marked Annex "C";
(d) Black and Decker Grinder, appearing in the attached
photograph, marked Annex "D";
(e) PEMCO Hydraulic Press, appearing in the attached
photograph, marked Annex "E";
(f) Battery charger (Tungar charge machine) appearing in the
attached photograph, marked Annex "F"; and
(g) D-Engine Waukesha-M-Fuel, appearing in the attached
photograph, marked Annex "G".

The Court of Tax Appeals having sustained the respondent city assessor's
ruling, and having denied a motion for reconsideration, petitioner brought the
case to this Court
Issue: WON that said tools, equipments or machineries are immovable
taxable real properties?
Held: No. So that movable equipments 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." We may here
distinguish, therefore, those movable which become immobilized by
destination because they are essential and principal elements in the industry
for those which may not be so considered immobilized because they
are merely incidental, not essential and principal.
Similarly, the tools and equipments in question in this instant case are, by
their nature, 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. Even without such tools and equipments,
its business may be carried on, as petitioner has carried on, without such
equipments, before the war. 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.
Sergs Product vs PCI
Facts: On February 13, 1998, respondent PCI Leasing and Finance, Inc.
(PCI Leasing for short) filed with the RTC-QC a complaint for [a] sum of
money (Annex E), with an application for a writ of replevin docketed as Civil
Case No. Q-98-33500.
On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent
judge issued a writ of replevin (Annex B) 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.
On March 24, 1998, in implementation of said writ, the sheriff proceeded to
petitioners factory, seized one machinery with [the] word that he [would]
return for the other machineries.
On March 25, 1998, petitioners filed a motion for special protective order
(Annex C), 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.
This motion was opposed by PCI Leasing (Annex F), on the ground that the
properties [were] still personal and therefore still subject to seizure and a writ
of replevin.
the appellate court held that the subject machines were personal property
Issue: WON the subject machiniries are personal property?
Held: Yes by stipulation. 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. 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.
[16]
In that sense, petitioners are correct in arguing that the said machines are
real, not personal, property pursuant to Article 415 (5) of the Civil Code.
Be that as it may, we disagree with the submission of the
petitioners that the said machines are not proper subjects of the
Writ of Seizure.
The Court has held that contracting parties may validly
stipulate that a real property be considered as personal.[18] After
agreeing to such stipulation, they are consequently estopped from
claiming otherwise. Under the principle of estoppel, a party to a
contract is ordinarily precluded from denying the truth of any
material fact found therein.

the sitio of Maa, barrio of Tigatu, municipality of Davao, Province of Davao.


However, the land upon which the business was conducted belonged to
another person. On the land the sawmill company erected a building which
housed the machinery used by it. Some of the implements thus used were
clearly personal property, the conflict concerning machines which were
placed and mounted on foundations of cement. In the contract of lease
between the sawmill company and the owner of the land there appeared the
following provision:
That on the expiration of the period agreed upon, all the
improvements and buildings introduced and erected by the party of
the second part shall pass to the exclusive ownership of the party of
the first part without any obligation on its part to pay any amount for
said improvements and buildings; also, in the event the party of the
second part should leave or abandon the land leased before the time
herein stipulated, the improvements and buildings shall likewise pass
to the ownership of the party of the first part as though the time
agreed upon had expired: Provided, however, That the machineries
and accessories are not included in the improvements which will
pass to the party of the first part on the expiration or abandonment of
the land leased.
In another action, wherein the Davao Light & Power Co., Inc., was the
plaintiff and the Davao, Saw, Mill Co., Inc., was the defendant, a judgment
was rendered in favor of the plaintiff in that action against the defendant in
that action; a writ of execution issued thereon, and the properties now in
question were levied upon as personalty by the sheriff. No third party claim
was filed for such properties at the time of the sales thereof as is borne out
by the record made by the plaintiff herein. Indeed the bidder, which was the
plaintiff in that action, and the defendant herein having consummated the
sale, proceeded to take possession of the machinery and other properties
described in the corresponding certificates of sale executed in its favor by the
sheriff of Davao.
As connecting up with the facts, it should further be explained that the Davao
Saw Mill Co., Inc., has on a number of occasions treated the machinery as
personal property by executing chattel mortgages in favor of third persons.
One of such persons is the appellee by assignment from the original
mortgages.
Issue: WON the machineries are to be considered as real property?

Davao Sawmill vs Castillo


Facts: The Davao Saw Mill Co., Inc., is the holder of a lumber concession
from the Government of the Philippine Islands. It has operated a sawmill in

Held: No. Exception to Art. 415. United States Supreme Court, it was
held that 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.
Prudential Bank vs Panis
Facts: on November 19, 1971, plaintiffs-spouses Fernando A. Magcale and
Teodula Baluyut Magcale secured a loan in the sum of P70,000.00 from the
defendant Prudential Bank. To secure payment of this loan, plaintiffs
executed in favor of defendant on the aforesaid date a deed of Real Estate
Mortgage over the following described properties:

deeds of Real Estate Mortgage as null and void.


Issue: WON the deed of Real Estate Mortgage is valid?
Held: In the enumeration of properties under Article 415 of the Civil Code of
the Philippines, this Court ruled that, "it is obvious that the inclusion of
"building" separate and distinct from the land, in said provision of law can
only mean that a building is by itself an immovable property." (Lopez vs.
Orosa, Jr., et al., L-10817-18, Feb. 28, 1958; Associated Inc. and Surety Co.,
Inc. vs. Iya, et al., L-10837-38, May 30,1958).

l. A 2-STOREY, SEMI-CONCRETE, residential building with


warehouse spaces containing a total floor area of 263 sq.
meters, more or less, generally constructed of mixed hard
wood and concrete materials, under a roofing of cor. g. i.
sheets; declared and assessed in the name of FERNANDO
MAGCALE under Tax Declaration No. 21109, issued by the
Assessor of Olongapo City with an assessed value of
P35,290.00. This building is the only improvement of the lot.

Thus, while it is true that a mortgage of land necessarily includes, in the


absence of stipulation of the improvements thereon, buildings, still a building
by itself may be mortgaged apart from the land on which it has been built.
Such a mortgage would be still a real estate mortgage for the building would
still be considered immovable property even if dealt with separately and apart
from the land (Leung Yee vs. Strong Machinery Co., 37 Phil. 644). In the
same manner, this Court has also established that possessory rights over
said properties before title is vested on the grantee, may be validly
transferred or conveyed as in a deed of mortgage (Vda. de Bautista vs.
Marcos, 3 SCRA 438 [1961]).

2. THE PROPERTY hereby conveyed by way of


MORTGAGE includes the right of occupancy on the lot
where the above property is erected

Caltex vs Central Board of Assessment

On April 24, 1973, the Secretary of Agriculture issued Miscellaneous Sales


Patent No. 4776 over the parcel of land, possessory rights over which were
mortgaged to defendant Prudential Bank, in favor of plaintiffs. On the basis of
the aforesaid Patent, and upon its transcription in the Registration Book of
the Province of Zambales, Original Certificate of Title No. P-2554 was issued
in the name of Plaintiff Fernando Magcale, by the Ex-Oficio Register of
Deeds of Zambales, on May 15, 1972.
For failure of plaintiffs to pay their obligation to defendant Bank after it
became due, and upon application of said defendant, the deeds of Real
Estate Mortgage (Exhibits "A" and "B") were extrajudicially foreclosed.
Consequent to the foreclosure was the sale of the properties therein
mortgaged to defendant as the highest bidder in a public auction sale
conducted by the defendant City Sheriff on April 12, 1978 (Exhibit "E"). The
auction sale aforesaid was held despite written request from plaintiffs through
counsel dated March 29, 1978, for the defendant City Sheriff to desist from
going with the scheduled public auction sale (Exhibit "D")." (Decision, Civil
Case No. 2443-0, Rollo, pp. 29-31).
Respondent Court, in a Decision dated November 3, 1978 declared the

Facts: This case is about the realty tax on machinery and equipment installed
by Caltex (Philippines) Inc. in its gas stations located on leased land.
The machines and equipment consists of underground tanks, elevated tank,
elevated water tanks, water tanks, gasoline pumps, computing pumps, water
pumps, car washer, car hoists, truck hoists, air compressors and tireflators.
The said machines and equipment are loaned by Caltex to gas station
operators under an appropriate lease agreement or receipt. It is stipulated in
the lease contract that the operators, upon demand, 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. The realty tax on said equipment
amounts to P4,541.10 annually (p. 52, Rollo). The city board of tax appeals

ruled that they are personalty. The assessor appealed to the Central Board of
Assessment Appeals.

This petition for certiorari now seeks to reverse the above ruling.
Issue: WON tailing dams are subject to realty tax?

Issue: WON the pieces of gas station equipment and machinery already
enumerated are subject to realty tax?
Held: Yes. We hold that the said equipment and machinery, as
appurtenances to the gas station building or shed owned by Caltex (as to
which it is subject to realty tax) 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 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.
Caltex invokes the rule that 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 (Davao Saw Mill Co. vs. Castillo, 61 Phil 709).
Improvements on land are commonly taxed as realty even though for some
purposes they might be considered personalty (84 C.J.S. 181-2, Notes 40
and 41). "It is a familiar phenomenon to see things classed as real property
for purposes of taxation which on general principle might be considered
personal property" (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630,
633).

Held: The petitioner does not dispute that the tailings dam may be
considered realty within the meaning of Article 415.
The Real Property Tax Code does not carry a definition of "real property" and
simply says that the realty tax is imposed on "real property, such as lands,
buildings, machinery and other improvements affixed or attached to real
property." In the absence of such a definition, we apply Article 415 of the Civil
Code
From the definitions and the cases cited above, 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.

Benguet Corporation vs Central Board of Assessment


Tumalad vs Vicencio
Facts: The realty tax assessment involved in this case amounts to
P11,319,304.00. It has been imposed on the petitioner's tailings dam and the
land thereunder over its protest.
The controversy arose in 1985 when the Provincial Assessor of Zambales
assessed the said properties as taxable improvements. The assessment was
appealed to the Board of Assessment Appeals of the Province of Zambales.
On August 24, 1988, 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 seasonably elevated the matter to the Central Board of
Assessment Appeals, 1 one of the herein respondents. In its decision dated
March 22, 1990, the Board reversed the dismissal of the appeal but, on the
merits, agreed that "the tailings dam and the lands submerged thereunder
(were) subject to realty tax."

Facts: It appears on the records that on 1 September 1955 defendantsappellants executed a chattel mortgage in favor of plaintiffs-appellees over
their house of strong materials located at No. 550 Int. 3, Quezon Boulevard,
Quiapo, Manila, over Lot Nos. 6-B and 7-B, Block No. 2554, which were
being rented from Madrigal & Company, Inc. The mortgage was registered in
the Registry of Deeds of Manila on 2 September 1955. The herein mortgage
was executed to guarantee a loan of P4,800.00 received from plaintiffsappellees, payable within one year at 12% per annum. The mode of payment
was P150.00 monthly, starting September, 1955, up to July 1956, and the
lump sum of P3,150 was payable on or before August, 1956. It was also
agreed that default in the payment of any of the amortizations, would cause
the remaining unpaid balance to become immediately due and Payable
When defendants-appellants defaulted in paying, the mortgage was
extrajudicially foreclosed, and on 27 March 1956, the house was sold at

public auction pursuant to the said contract. As highest bidder, plaintiffsappellees were issued the corresponding certificate of sale. 3 Thereafter, on
18 April 1956, plaintiffs-appellant commenced Civil Case No. 43073 in the
municipal court of Manila, praying, among other things, that the house be
vacated and its possession surrendered to them, and for defendantsappellants to pay rent of P200.00 monthly from 27 March 1956 up to the time
the possession is surrendered. 4 On 21 September 1956, the municipal court
rendered
Defendants-appellants, in their answers in both the municipal court and
court a quo impugned the legality of the chattel mortgage,
Issue: WON the subject matter of the mortgage 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?
Held: No. Certain deviations, however, have been allowed for various
reasons. In the case of Manarang and Manarang vs. Ofilada, 17 this Court
stated that "it is undeniable that the parties to a contract may by agreement
treat as personal property that which by nature would be real property",
citing Standard Oil Company of New York vs. Jaramillo. 18 In the latter case,
the mortgagor conveyed and transferred to the mortgagee by way of
mortgage "the following described personal property." 19The "personal
property" consisted of leasehold rights and a building. Again, in the case
of Luna vs. Encarnacion, 20 the subject of the contract designated as Chattel
Mortgage was a house of mixed materials, and this Court hold therein that it
was a valid Chattel mortgage because it was so expressly designated and
specifically that the property given as security "is a house of mixed materials,
which by its very nature is considered personal property."
In the contract now before Us, the house on rented land is not only expressly
designated as Chattel Mortgage; it specifically provides that "the
mortgagor ... voluntarily CEDES, SELLS and TRANSFERS by way of Chattel
Mortgage 23 the property together with its leasehold rights over the lot on
which it is constructed and participation ..." 24Although there is no specific
statement referring to the subject house as personal property, yet by ceding,
selling or transferring a property by way of chattel mortgage defendantsappellants could only have meant to convey 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. Moreover, the subject
house stood on a rented lot to which defendats-appellants merely had a
temporary right as lessee, and although this can not in itself alone determine
the status of the property, it does so when combined with other factors to
sustain the interpretation that the parties, particularly the mortgagors,
intended to treat the house as personalty. Finally unlike in the Iya
cases, Lopez vs. Orosa, Jr. and Plaza Theatre, Inc. 25 and Leung Yee vs. F.

L. Strong Machinery and Williamson, 26 wherein third persons assailed the


validity of the chattel mortgage, 27 it is the defendants-appellants themselves,
as debtors-mortgagors, who are attacking the validity of the chattel mortgage
in this case. The doctrine of estoppel therefore applies to the herein
defendants-appellants, having treated the subject house as personalty.
Makati Leasing and Finance Corporation vs Wearever Textile Mills
Facts: It appears that in order to obtain financial accommodations from
herein petitioner Makati Leasing and Finance Corporation, the private
respondent Wearever Textile Mills, Inc., discounted and assigned several
receivables with the former under a Receivable Purchase Agreement. To
secure the collection of the receivables assigned, private respondent
executed a Chattel Mortgage over certain raw materials inventory as well as
a machinery described as an Artos Aero Dryer Stentering Range.
Upon private respondent's default, petitioner 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 private
respondent's premises and was not able to effect the seizure of the
aforedescribed machinery. Petitioner thereafter filed a complaint for judicial
foreclosure with the Court of First Instance of Rizal, Branch VI, docketed as
Civil Case No. 36040, the case before the lower court.
Acting on petitioner's application for replevin, the lower court issued a writ of
seizure, the enforcement of which was however subsequently restrained
upon private respondent's filing of a motion for reconsideration. After several
incidents, the lower court finally issued on February 11, 1981, an order lifting
the restraining order for the enforcement of the writ of seizure and an order to
break open the premises of private respondent to enforce said writ. The
lower court reaffirmed its stand upon private respondent's filing of a further
motion for reconsideration.
On July 13, 1981, the sheriff enforcing the seizure order, repaired to the
premises of private respondent and removed the main drive motor of the
subject machinery.
The Court of Appeals, in certiorari and prohibition proceedings subsequently
filed by herein private respondent, set aside the Orders of the lower court
and ordered the return of the drive motor seized by the sheriff pursuant to
said Orders, 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, the same being attached to the
ground by means of bolts and the only way to remove it from respondent's
plant would be to drill out or destroy the concrete floor, the reason why all

that the sheriff could do to enfore the writ was to take the main drive motor of
said machinery. The appellate court rejected petitioner's argument that
private respondent is estopped from claiming that the machine is real
property by constituting a chattel mortgage thereon.
A motion for reconsideration of this decision of the Court of Appeals having
been denied, petitioner has brought the case to this Court for review by writ
of certiorari.
Issue: WON the machinery in suit is real or personal property?
Held: 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
inStandard 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 real property, as long as no interest of third parties
would be prejudiced thereby.
Private respondent contends that estoppel cannot apply against it because it
had never represented nor agreed that the machinery in suit be considered
as personal property but was merely required and dictated on by herein
petitioner to sign a printed form of chattel mortgage which was in a blank
form at the time of signing. This contention lacks persuasiveness. As aptly
pointed out by petitioner and not denied by the respondent, the status of the
subject machinery as movable or immovable was never placed in issue
before the lower court and the Court of Appeals except in a supplemental
memorandum in support of the petition filed in the appellate court. Moreover,
even granting that the charge is true, such fact alone does not render a
contract void ab initio, but can only be a ground for rendering said contract
voidable, or annullable pursuant to Article 1390 of the new Civil Code, by a
proper action in court. There is nothing on record to show that the mortgage
has been annulled. Neither is it disclosed that steps were taken to nullify the
same. On the other hand, as pointed out by petitioner and again not refuted
by respondent, the latter has indubitably benefited from said contract. Equity
dictates that one should not benefit at the expense of another. Private

respondent could not now therefore, be allowed to impugn the efficacy of the
chattel mortgage after it has benefited therefrom,
the Tumalad case bears more nearly perfect parity with the instant case to be
the more controlling jurisprudential authority.
Santos Evangelista vs Alto Surety and Insurance Company
Facts: Briefly, the facts are: On June 4, 1949, petitioner herein, Santos
Evangelista, instituted Civil Case for a sum of money. On the same date, he
obtained a writ of attachment, which levied upon a house, built by Rivera on
a land situated in Manila and leased to him, by filing copy of said writ and the
corresponding notice of attachment with the Office of the Register of Deeds
of Manila, on June 8, 1949. In due course, judgment was rendered in favor of
Evangelista, who, on October 8, 1951, bought the house at public auction
held in compliance with the writ of execution issued in said case. The
corresponding definite deed of sale was issued to him on October 22, 1952,
upon expiration of the period of redemption. 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. respondent herein and that the latter is now the true owner of said
property. Hence, on June 13, 1953, Evangelista instituted the present action
against respondent and Ricardo Rivera, for the purpose of establishing his
(Evangelista) title over said house, securing possession thereof, apart from
recovering damages.
After due trial, the Court of First Instance of Manila rendered judgment for
Evangelista, sentencing Rivera and respondent to deliver the house in
question to petitioner herein and to pay him, jointly and severally, forty pesos
(P40.00) a month from October, 1952, until said delivery, plus costs.
On appeal taken by respondent, this decision was reversed by the Court of
Appeals, which absolved said respondent from the complaint, upon the
ground that, although the writ of attachment in favor of Evangelista had been
filed with the Register of Deeds of Manila prior to the sale in favor of
respondent, Evangelista did not acquire thereby a preferential lien, the
attachment having been levied as if the house in question were immovable
property, although in the opinion of the Court of Appeals, it is "ostensibly a
personal property."
Evangelista now seeks a review, by certiorari, of this decision of the Court of
Appeals. In this connection, it is not disputed that although the sale to the
respondent preceded that made to Evangelists, the latter would have a better
right if the writ of attachment, issued in his favor before the sale to the
respondent, had been properly executed or enforced.

Issue: whether a house, constructed the lessee of the land on which it is


built, should be dealt with, for purpose, of attachment, as immovable
property, or as personal property?
Held: It is, our considered opinion that said house is not personal property,
much less a debt, credit or other personal property not capable of manual
delivery, but immovable property. As explicitly held, in Laddera vs. Hodges
(48 Off. Gaz., 5374), "a true building (not merely superimposed on the soil) is
immovable or real property, whether it is erected by the owner of the land or
by usufructuary or lessee. This is the doctrine of our Supreme Court in Leung
Yee vs. Strong Machinery Company, 37 Phil., 644. And it is amply supported
by the rulings of the French Court. . . ."
It is true that the parties to a deed of chattel mortgage may agree to consider
a house as personal property for purposes of said contract
(Luna vs. Encarnacion, * 48 Off. Gaz., 2664; Standard Oil Co. of New
York vs.Jaramillo, 44 Phil., 630; De Jesus vs. Juan Dee Co., Inc., 72 Phil.,
464). However, this view is good only insofar as the contracting parties are
concerned. It is based, partly, upon the principle of estoppel. Neither this
principle, nor said view, is applicable to strangers to said contract. Much less
is it in point where there has been no contract whatsoever, with respect to the
status of the house involved, as in the case at bar.
Tsai vs CA
Facts: Respondent Ever Textile Mills, Inc. (Evertex) obtained two loans from
petitioner Philippine Bank of Communications (PBCom). As security for the
first loan, Evertex executed 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. The second loan was secured
by a chattel mortgage over personal properties enumerated in a list attached
thereto. Due to business reverses, Evertex filed insolvency proceeding,
where it was declared insolvent by the then Court of First Instance. All its
assets were taken into the custody of the insolvency court, including the
collateral, real and personal, securing the two mortgages. Upon Evertex's
failure to meet its obligation to PBCom, the latter commenced extrajudicial
foreclosure proceedings. PBCom was the highest bidder on the two public
auctions held. PBCom consolidated its ownership over the lot and all the
properties in it. It leased the entire factory premises to petitioner Ruby
L. Tsai, and subsequently sold it to her, including the contested machineries.
Evertex filed a complaint for annulment of sale, reconveyance, and damages
with the Regional Trial Court against PBCom, alleging that the extrajudicial
foreclosure of subject mortgage was in violation of the Insolvency Law.
Evertex claimed that PBCom, without any legal or factual basis, appropriated
the contested properties, which were not included in the real and chattel
mortgage and neither were those properties included in the notice of sheriff's

sale. The RTC agreed with Evertex and ruled that the lease and sale of said
personal properties were irregular and illegal. Dissatisfied, both PBCom
and Tsai appealed to the Court of Appeals. The CA affirmed the judgment
appealed from and denied the motion for reconsideration. PBCom
and Tsai filed their separate petitions for review with the Supreme Court.
Issue:
DID
THE COURT OF APPEALS VALIDLY
DECREE
THE
MACHINERIES LISTED UNDER PARAGRAPH 9 OF THE COMPLAINT
BELOW AS PERSONAL PROPERTY OUTSIDE OF THE 1975 DEED OF
REAL ESTATE MORTGAGE AND EXCLUDED THEM FROM THE REAL
PROPERTY EXTRAJUDICIALLY FORECLOSED BY PBCOM DESPITE THE
PROVISION IN THE 1975 DEED THAT ALL AFTER-ACQUIRED
PROPERTIES DURING THE LIFETIME OF THE MORTGAGE SHALL
FORM PART THEREOF, AND DESPITE THE UNDISPUTED FACT THAT
SAID MACHINERIES ARE BIG AND HEAVY, BOLTED OR CEMENTED ON
THE REAL PROPERTY MORTGAGED BY EVER TEXTILE MILLS TO
PBCOM, AND WERE ASSESSED FOR REAL ESTATE TAX PURPOSES?
(WoN the properties are to be considered as personal property?)
Held: Yes. While it is true that the controverted properties appear to be
immobile, a perusal of the contract of Real and Chattel Mortgage executed
by the parties herein gives us a contrary indication. In the case at bar, both
the trial and the appellate courts reached the same finding that the true
intention of PBCOM and the owner, EVERTEX, is to treat machinery and
equipment as chattels.
Too, 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, 9
SCRA 631 (1963), 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.
In the instant case, the parties herein: (1) executed a contract styled as "Real
Estate Mortgage and Chattel Mortgage," instead of just "Real Estate
Mortgage" if indeed their intention is to treat all properties included therein as
immovable, and (2) attached to the said contract a separate "LIST OF
MACHINERIES & EQUIPMENT." These facts, taken together, evince the
conclusion that the parties' intention is to treat these units of machinery as
chattels. A fortiori, the contested after-acquired properties, which are of the
same description as the units enumerated under the title "LIST OF
MACHINERIES & EQUIPMENT," must also be treated as chattels.
Burgos vs Chief of Staff

Facts: Assailed in this petition for certiorari, prohibition and mandamus with
preliminary mandatory and prohibitory injunction is the validity of two [2]
search warrants issued on December 7, 1982 by respondent Judge Ernani
Cruz-Pao, Executive Judge of the then Court of First Instance of Rizal
[Quezon City], 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. publishereditor of the "We Forum" newspaper, were seized.
Petitioners further pray that a writ of preliminary mandatory and prohibitory
injunction be issued for the return of the seized articles, and that
respondents, "particularly the Chief Legal Officer, Presidential Security
Command, the Judge Advocate General, AFP, the City Fiscal of Quezon City,
their representatives, assistants, subalterns, subordinates, substitute or
successors" be enjoined from using the articles thus seized as evidence
against petitioner Jose Burgos, Jr. and the other accused in Criminal Case.

theatre business. It was intimated that Orosa, his family and close friends
were organizing a corporation to be known as Plaza Theatre, Inc., that
would engage in such venture. Pursuant to said verbal
agreement, Lopez delivered the lumber which was used for the
construction of the Plaza Theatre on May 17, 1946, up to December 4 of
the same year. But of the total cost of the materials amounting to
P62,255.85, Lopez was paid only P20,848.50, thus leaving a balance of
P41,771.35.
We may state at this juncture that the Plaza Theatre was erected
on a piece of land with an area of 679.17 square meters formerly owned
by Vicente Orosa, Jr., and was acquired by the corporation on
September 25, 1946, for P6,000. As Lopez was pressing Orosa for
payment of the remaining unpaid obligation, the latter and Belarmino
Rustia, the president of the corporation, promised to obtain a bank loan
by mortgaging the properties of the Plaza Theatre, Inc., out of which said
amount of P41,771.35 would be satisfied, to which assuranceLopez had
to accede. Unknown to him, however, as early as November, 1946, the
corporation already got a loan for P30,000 from the Philippine National
Bank with the 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.

Issue: WoN the said equipments are personal property?


Held: Under Article 415 [5] of the Civil Code of the Philippines, "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" are considered immovable property . In Davao Sawmill Co. vs.
Castillo (61 Phil. 709) where this legal provision was invoked, this Court
ruled that machinery which is movable by nature becomes immobilized when
placed by the owner of the tenement, property or plant, but not so when
placed by a tenant, usufructuary, or any other person having only a
temporary right, unless such person acted as the agent of the owner. In the
case at bar, 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.
Lopez vs Orosa
Facts: Enrique Lopez is a resident of Balayan, Batangas, doing
business under the trade name of Lopez-Castelo Sawmill. Sometime in
May, 1946, Vicente Orosa, Jr., also a resident of the same province,
dropped at Lopez' house and invited him to make an investment in the

Persistent demand from Lopez for the payment of the amount due him
caused Vicente Orosa, Jr. to execute on March 17, 1947, an alleged
"deed of assignment" of his 420 shares of stock of the Plaza Theater,
Inc., at P100 per share or with a total value of P42,000 in favor of the
creditor, and as the obligation still remained unsettled, Lopez filed on
November 12, 1947, a complaint with the Court of First Instance of
Batangas (Civil Case No. 4501 which later became R-57) against
Vicente Orosa Jr. and Plaza Theatre, Inc., praying that defendants be
sentenced to pay him jointly and severally the sum of P41,771.35 with
legal interest from the filing of the action; that in case defendants fail to
pay the same, that the building and the land covered by OCT No. O-391
owned by the corporation be sold at public auction and the proceeds
thereof be applied to said indebtedness; or that the 420 shares of the
capital stock of the Plaza Theatre, Inc., assigned by Vicente Orosa, Jr.,
to said plaintiff be sold at public auction for the same purpose; and for
such other remedies as may be warranted by the circumstances. Plaintiff
also caused the annotation of a notice of lis pendens on said properties
with the Register of Deeds.
The surety company, in the meantime, upon discovery that the land was
already registered under the Torrens System and that there was a notice
of lis pendens thereon, filed on August 17, 1948, or within the 1-year period
after the issuance of the certificate of title, a petition for review of the decree

of the land registration court dated October 18, 1947, which was made the
basis of OCT No. 0-319, in order to annotate the lights and interests of the
surety company over said properties (Land Registration Case No. 17 GLRO
Rec. No. 296). Opposition thereto was offered by Enrique Lopez, asserting
that the amount demanded by him constituted a preferred lien over the
properties of the obligors; that the surety company was guilty of negligence
when it failed to present an opposition to the application for registration of the
property; and that if any annotation of the rights and interest of said surety
would ever be made, same must be subject to the lien in his favor.

On October 15, 1969 Judge Taada issued an Order granting Goulds' Motion
for Issuance of Writ of Execution dated October 14, 1969, declaring the
reasons therein alleged to be meritorious.

Issue: WoN the said property is to be considered personal property?

2) "the sale was made without the notice required by Sec. 18, Rule 39, of the
New Rules of Court," i.e., notice by publication in case of execution sale of
real property, the pump and its accessories being immovable because
attached to the ground with character of permanency (Art. 415, Civil Code).

Held: No. the inclusion of the building, separate and distinct from
the land, in the enumeration of what may constitute real
properties 1 could mean only one thing that a building is by itself an
immovable property, a doctrine already pronounced by this Court in the
case of Leung Yee vs. Strong Machinery Co., 37 Phil., 644. Moreover,
and 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 invoked by
appellant reveals that the law gives preference to unregistered
refectionary credits only with respect to the real estate upon which the
refection or work was made. This being so, the inevitable conclusion
must be that the lien so created attaches merely to the immovable
property for the construction or repair of which the obligation was
incurred. Evidently, therefore, the lien in favor of appellant for the unpaid
value of the lumber used in the construction of the building attaches only
to said structure and to no other property of the obligors.
Yap vs Tanada
Facts: The case began in the City Court of Cebu with the filing by Goulds
Pumps International (Phil.), Inc. of a complaint 2 against Yap and his
wife 3 seeking recovery of P1,459.30 representing the balance of the price
and installation cost of a water pump in the latter's premises.
Yap appealed to the Court of First Instance.
Goulds presented evidence ex parte and judgment by default was rendered
the following day by Judge Taada requiring Yap to pay to Goulds (1)
Pl,459.30 representing the unpaid balance of the pump purchased by him;
(2) interest. On September 16, 1969 Yap filed a motion for reconsideration.

Yap forthwith filed an "Urgent Motion for Reconsideration of Order" dated


October 17, 1969, 13 contending that the judgment had not yet become final,
since contrary to Goulds' view, his motion for reconsideration was not pro
forma for lack of an affidavit of merit, this not being required under Section 1
(a) of Rule 37 of the Rules of Court upon which his motion was grounded.

In the meantime the Sheriff levied on the water pump in question, 19 and by
notice dated November 4, 1969, scheduled the execution sale thereof on
November 14, 1969. 20 But in view of the pendency of Yap's motion for
reconsideration of October 29, 1969, suspension of the sale was directed by
Judge Taada in an order dated November 6, 1969.
Judge Taada thereafter promulgated another Order dated September 21,
1970 granting a motion of Goulds for completion of execution of the judgment
of August 29, 1969. Once more, Yap sought reconsideration. He submitted a
"Motion for Reconsideration of Two Orders"
On December 3, 1970, Yap filed a "Notice of Appeal"
Issue: WoN the property has been converted into a real property?
Held: No. Yap's next argument that the water pump had become immovable
property by its being installed in his residence is also untenable. 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." 42 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.
Machineries and Engineering Supplies Inc. vs CA
Facts: On March 13, 1953, the herein
petitioner filed a complaint for replevin for the
recovery of the machineries and equipments sold

and delivered to said defendants at their factory in


barrio Bigti, Norzagaray, Bulacan. respondent judge
issued an order, commanding the Provincial Sheriff
of Bulacan to seize and take immediate possession
of the properties specified in the order (Appendix I,
Answer). On March 19, 1953, two deputy sheriffs of
Bulacan, the said Ramon S. Roco, and a crew of
technical men and laborers proceeded to Bigti, for
the purpose of carrying the court's order into effect.
Leonardo Contreras, Manager of the respondent
Company, and Pedro Torres, in charge thereof, met
the deputy sheriffs, and Contreras handed to them a
letter addressed to Atty. Leopoldo C. Palad, exofficio Provincial Sheriff of Bulacan, signed by Atty.
Adolfo Garcia of the defendants therein, protesting
against the seizure of the properties in question, on
the ground that they are not personal properties.
Contending that the Sheriff's duty is merely
ministerial, the deputy sheriffs, Roco, the letter's
crew of technicians and laborers, Contreras and
Torres went to the factory. Roco's attention was
called to the fact that the equipments could not
possibly be dismantled without causing damages or
injuries to the wooden frames attached to them. As
Roco insisted in dismantling the equipments on his
own responsibility, alleging that the bond was posted
for such eventuality, the deputy sheriffs directed that
some of the supports thereof be cut (Appendix 2).
On March 20, 1953, the defendant Company filed an
urgent motion, with a counter-bond in the amount of
P15,769, for the return of the properties seized by
the deputy sheriffs. On the same day, the trial court
issued an order, directing the Provincial Sheriff of
Bulacan to return the machineries and equipments
to the place where they were installed at the time of
the seizure (Appendix 3). On March 21, 1953, the
deputy sheriffs returned the properties seized, by
depositing them along the road, near the quarry, of
the defendant Company, at Bigti, without the benefit
of inventory and without re-installing them in their
former position and replacing the destroyed posts,
which rendered their use impracticable. On March
23, 1953, the defendants' counsel asked the
Provincial Sheriff if the machineries and equipments,
dumped on the road would he re-installed to their
former position and condition (letter, Apendix 4). On

March 24, 1953, the Provincial Sheriff filed an urgent


motion in court, manifesting that Roco had been
asked to furnish the Sheriff's office with expenses,
laborers, technical men and equipments, to carry
into effect the court's order, to return the seized
properties in the same way said Roco found them
on the day of seizure, but said Roco absolutely
refused to do so, and asking the court that the
Plaintiff therein be ordered to provide the required
aid or relieve the said Sheriff of the duty of
complying with the said order of March 20, 1953
(Appendix 5). On March 30, 1953, the trial court
ordered the Provincial Sheriff and the Plaintiff to
reinstate the machineries and equipments removed
by them in their original condition in which they were
found before their removal at the expense of the
Plaintiff (Appendix 7). on May 4, 1953, the trial court
ordered the Plaintiff therein to furnish the Provincial
Sheriff within 5 days with the necessary funds,
technical men, laborers, equipments and materials
to effect the repeatedly mentioned re-installation
(Appendix 13)." (Petitioner's brief, Appendix A, pp. IIV.)
Issue: When does machineries considered to be immovable? (are
the machineries in the case immovable)
Held: Yes. The machinery and equipment in question appeared to
be attached to the land, particularly to the concrete foundation of a
building, 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 to also cut some
of its wooden supports. 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 of the Philippines.
Province of Zamboanga vs City of Zamboanga
Facts: Commonwealth Act 39 was approved converting the Municipality of
Zamboanga into Zamboanga City. Sec. 50 of the Act also provided that

Buildings and properties which the province shall abandon


upon the transfer of the capital to another place will be acquired and
paid for by the City of Zamboanga at a price to be fixed by the
Auditor General.
It appears that in 1945, the capital of Zamboanga Province was
transferred to Dipolog. 2 Subsequently, or on June 16, 1948, Republic Act 286
was approved creating the municipality of Molave and making it the capital of
Zamboanga Province.
On June 6, 1952, Republic Act 711 was approved dividing the province of
Zamboanga into two (2): Zamboanga del Norte and Zamboanga del Sur. As
to how the assets and obligations of the old province were to be divided
between the two new ones, Sec. 6 of that law provided:
Upon the approval of this Act, the funds, assets and other
properties and the obligations of the province of Zamboanga shall be
divided equitably between the Province of Zamboanga del Norte and
the Province of Zamboanga del Sur by the President of the
Philippines, upon the recommendation of the Auditor General.
Pursuant thereto, the Auditor General, on January 11, 1955, apportioned the
assets and obligations of the defunct Province of Zamboanga as follows:
54.39% for Zamboanga del Norte and 45.61% for Zamboanga del Sur.
Zamboanga del Norte therefore became entitled to 54.39% of
P1,294,244.00, the total value of the lots and buildings in question, or
P704,220.05 payable by Zamboanga City.
On March 17, 1959, the Executive Secretary, by order of the President,
issued a ruling 4 holding that Zamboanga del Norte had a vested right as
owner (should be co-owner pro-indiviso) of the properties mentioned in Sec.
50 of Commonwealth Act 39, and is entitled to the price thereof, payable by
Zamboanga City.
Subsequently, but prior to the perfection of defendants' appeal, plaintiff
province filed a motion to reconsider praying that Zamboanga City be
ordered instead to pay the P704,220.05 in lump sum with 6% interest per
annum. Over defendants' opposition, the lower court granted plaintiff
province's motion.
The defendants then brought the case before Us on appeal.
Republic Act 3039 was approved amending Sec. 50 of Commonwealth Act
39 by providing that

All buildings, properties and assets belonging to the former


province of Zamboanga and located within the City of Zamboanga
are hereby transferred, free of charge, in favor of the said City of
Zamboanga.
Issue: WoN R.A. No. 3039 is valid?
Held: The validity of the law ultimately depends on the nature of the 50 lots
and buildings thereon in question. For, the matter involved here is the
extent of legislative
control
over
the
properties of a
municipal
corporation, of which a province is one. The principle itself is simple: If the
property is owned by the municipality (meaning municipal corporation) in its
public and governmental capacity, the property is public and Congress has
absolute control over it. But if the property is owned in its private or
proprietary capacity, then it is patrimonial and Congress has no absolute
control. The municipality cannot be deprived of it without due process and
payment of just compensation. 6
The capacity in which the property is held is, however, dependent on the use
to which it is intended and devoted. Now, which of two norms, i.e., that of the
Civil Code or that obtaining under the law of Municipal Corporations, must be
used in classifying the properties in question?
Applying the above cited norm, all the properties in question, except the two
(2) lots used as High School playgrounds, could be considered as
patrimonial properties of the formerZamboanga province. On the other hand,
applying the norm obtaining under the principles constituting the
law of Municipal Corporations, all those of the 50 properties in question
which are devoted to public service are deemed public; the rest remain
patrimonial. Under this norm, to be considered public, it is enough that the
property be held and devoted for governmental purposes like local
administration, public education, public health, etc. 10
Following this classification, Republic Act 3039 is valid insofar as it affects
the lots used as capitol site, school sites and its grounds, hospital and
leprosarium sites and the high school playground sites a total of 24 lots
since these were held by the former Zamboanga province in its governmental
capacity and therefore are subject to the absolute control of Congress. Said
lots considered as public property.
But Republic Act 3039 cannot be applied to deprive Zamboanga del
Norte of its share in the value of the rest of the 26 remaining lots which are
patrimonial properties since they are not being utilized for distinctly
governmental purposes.

It results then that Zamboanga del Norte is still entitled to collect from
the City of Zamboanga the former's 54.39% share in the 26 properties which
are patrimonial in nature, said share to be computed on the basis of the
valuation of said 26 properties as contained in Resolution No. 7, dated March
26, 1949, of the Appraisal Committee formed by the Auditor General.

Salas vs Jarencio
Facts: On February 24, 1919, the 4th Branch of the Court of First Instance of
Manila, acting as a land registration court, rendered judgment, declaring the
City of Manila the owner in fee simple of a parcel of land known as Lot No. 1,
Block 557 of the Cadastral Survey of the City of Manila, containing an area of
9,689.8 square meters, more or less. Pursuant to said judgment the Register
of Deeds of Manila on August 21, 1920, issued in favor of the City of Manila
As a consequence of the transactions Original Certificate of Title No. 4329
was cancelled and transfer certificates of title were issued in favor of Pura
Villanueva for the portions purchased by her.
Vice-Mayor Antono J. Villegas, adopted a resolution requesting His
Excellency, the President of the Philippines to consider the feasibility of
declaring the City property bounded by Florida, San Andres, and Nebraska
Streets
The said resolution of the Municipil Board of the City of Manila was officially
transmitted to the President of the Philippines
on the same date, transmitted to the Senate and House of Representatives
of the Congress of the Philippines.
During the First Session of the Fifth Congress of the Philippines, House Bill
No. 191 was filed in the House of Representatives by then Congressman
Bartolome Cabangbang seeking to declare the property in question as
patrimonial property of the City of Manila,
Subsequently, a revised version of the Bill was introduced in the House of
Representatives
with the following explanatory note:
The accompanying bill seeks to convert one (1) parcel of
land in the district of Malate, which is reserved as communal

property into a disposable or alienable property of the


State and to provide its subdivision and sale to bona fide
occupants or tenants.
Issue: Is the property involved private or patrimonial property of the
City of Manila?
Held: There is one outstanding factor that should be borne in mind in
resolving the character of the land involved, and it is that the City of Manila,
although declared by the Cadastral Court as owner in fee simple, has not
shown by any shred of evidence in what manner it acquired said land as its
private or patrimonial property. Originally the municipality owned no
patrimonial property except those that were granted by the State not for its
public but for private use. Other properties it owns are acquired in the course
of the exercise of its corporate powers as a juridical entity to which category
a municipal corporation pertains.
Communal lands or "legua comunal" came into existence when a town or
pueblo was established in this country under the laws of Spain (Law VII, Title
III, Book VI, Recopilacion de las Leyes de Indios). The municipalities of the
Philippines were not entitled, as a matter of right, to any part of the public
domain for use as communal lands. The Spanish law provided that the
usufruct of a portion of the public domain adjoining municipal territory might
be granted by the Government for communal purposes, upon proper petition,
but, until granted, no rights therein passed to the municipalities, and, in any
event, the ultimate title remained in the sovereign (City of Manila vs. Insular
Government, 10 Phil. 327).
True it is that the legislative control over a municipal corporation is not
absolute even when it comes to its property devoted to public use, for such
control must not be exercised to the extent of depriving persons of their
property or rights without due process of law, or in a manner impairing the
obligations of contracts. Nevertheless, when it comes to property of the
municipality which it did not acquire in its private or corporate capacity with
its own funds, the legislature can transfer its administration and disposition to
an agency of the National Government to be disposed of according to its
discretion. Here it did so in obedience to the constitutional mandate of
promoting social justice to insure the well-being and economic security of the
people.
The Congress has dealt with the land involved as one reserved for
communal use (terreno comunal). The act of classifying State property calls
for the exercise of wide discretionary legislative power and it should not be
interfered with by the courts.

Cebu Oxygen vs Bercilles


Facts: This is a petition for the review.
The parcel of land sought to be registered was originally a portion of M.
Borces Street, Mabolo, Cebu City. the City Council of Cebu, through
Resolution No. 2193, approved on October 3, 1968, declared the terminal
portion of M. Borces Street, Mabolo, Cebu City, as an abandoned road, the
same not being included in the City Development Plan. Subsequently, on
December 19, 1968, the City Council of Cebu passed Resolution No. 2755,
authorizing the Acting City Mayor to sell the land through a public
bidding. Pursuant thereto, the lot was awarded to the herein petitioner being
the highest bidder and on March 3, 1969, the City of Cebu, through the
Acting City Mayor, executed a deed of absolute sale to the herein petitioner
for a total consideration of P10,800.00. By virtue of the aforesaid deed of
absolute sale, the petitioner filed an application with the Court of First
Instance of Cebu to have its title to the land registered.
On June 26, 1974, the Assistant Provincial Fiscal of Cebu filed a motion to
dismiss the application on the ground that the property sought to be
registered being a public road intended for public use is considered part of
the public domain and therefore outside the commerce of man,
Consequently, it cannot be subject to registration by any private individual.
After hearing the parties, on October 11, 1914 the trial court issued an order
dismissing the petitioner's application for registration of title. 6 Hence, the
instant petition for review.
Issue: WoN the declaration of the road, as abandoned, make it the
patrimonial property of the City of Cebu which may be the object of a
common contract?
Held: Yes. Since that portion of the city street subject of petitioner's
application for registration of title was withdrawn from public use, it follows
that such withdrawn portion becomes patrimonial property which can be the
object of an ordinary contract.

Accordingly, withdrawal of the property in question from public use and its
subsequent sale to the petitioner is valid. Hence, the petitioner has a
registerable title over the lot in question.
Chavez vs PEA
Facts: On November 20, 1973, the government, through the
Commissioner of Public Highways, signed a contract with the Construction
and Development Corporation of the Philippines (CDCP for brevity) to
reclaim certain foreshore and offshore areas of Manila Bay. The contract also
included the construction of Phases I and II of the Manila-Cavite Coastal
Road. CDCP obligated itself to carry out all the works in consideration of fifty
percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued
Presidential Decree No. 1084 creating PEA. PD No. 1084 tasked PEA to
reclaim land, including foreshore and submerged areas, and to develop,
improve, acquire, x x x lease and sell any and all kinds of lands. [1] On the
same date, then President Marcos issued Presidential Decree No. 1085
transferring to PEA the lands reclaimed in the foreshore and offshore of the
Manila Bay[2] under the Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum
directing PEA to amend its contract with CDCP, so that [A]ll future works in
MCCRRP x x x shall be funded and owned by PEA.
January 19, 1988, then President Corazon C. Aquino issued Special Patent
No. 3517, granting and transferring to PEA the parcels of land so reclaimed
under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP)
containing a total area of one million nine hundred fifteen thousand eight
hundred ninety four (1,915,894) square meters.

Article 422 of the Civil Code expressly provides that "Property of public
dominion, when no longer intended for public use or for public service, shall
form part of the patrimonial property of the State."

On April 25, 1995, PEA entered into a Joint Venture Agreement (JVA for
brevity) with AMARI, a private corporation, to develop the Freedom
Islands. The JVA also required the reclamation of an additional 250 hectares
of submerged areas surrounding these islands to complete the configuration
in the Master Development Plan of the Southern Reclamation ProjectMCCRRP. PEA and AMARI entered into the JVA through negotiation without
public bidding.

Besides, the Revised Charter of the City of Cebu heretofore quoted, in very
clear and unequivocal terms, states that: "Property thus withdrawn from
public servitude may be used or conveyed for any purpose for which other
real property belonging to the City may be lawfully used or conveyed."

On November 29, 1996, then Senate President Ernesto Maceda


delivered a privilege speech in the Senate and denounced the JVA as the
grandmother of all scams. As a result, the Senate Committee on Government
Corporations and Public Enterprises, and the Committee on Accountability of

Public Officers and Investigations, conducted a joint investigation. The


Senate Committees reported the results of their investigation in Senate
Committee Report No. 560 dated September 16, 1997. [7] Among the
conclusions of their report are: (1) the reclaimed lands PEA seeks to transfer
to AMARI under the JVA are lands of the public domain which the
government has not classified as alienable lands and therefore PEA cannot
alienate these lands; (2) the certificates of title covering the Freedom Islands
are thus void, and (3) the JVA itself is illegal.

kinds of lands x x x owned, managed, controlled and/or operated by the


government.[87] (Emphasis supplied) There is, therefore, legislative
authority granted to PEA to sell its lands, whether patrimonial or
alienable lands of the public domain. PEA may sell to private parties
its patrimonial properties in accordance with the PEA charter free from
constitutional limitations. The constitutional ban on private corporations from
acquiring alienable lands of the public domain does not apply to the sale of
PEAs patrimonial lands.

On December 5, 1997, then President Fidel V. Ramos issued


Presidential Administrative Order No. 365 creating a Legal Task Force to
conduct a study on the legality of the JVA in view of Senate Committee
Report No. 560.

PEA may also sell its alienable or disposable lands of the public
domain to private individuals since, with the legislative authority, there is no
longer any statutory prohibition against such sales and the constitutional ban
does not apply to individuals. PEA, however, cannot sell any of its alienable
or disposable lands of the public domain to private corporations since
Section 3, Article XII of the 1987 Constitution expressly prohibits such
sales. The legislative authority benefits only individuals. Private corporations
remain barred from acquiring any kind of alienable land of the public domain,
including government reclaimed lands.

On April 27, 1998, petitioner Frank I. Chavez (Petitioner for brevity) as a


taxpayer, filed the instant Petition for Mandamus with Prayer for the Issuance
of a Writ of Preliminary Injunction and Temporary Restraining Order.
Petitioner assails the sale to AMARI of lands of the public domain as a
blatant violation of Section 3, Article XII of the 1987 Constitution prohibiting
the sale of alienable lands of the public domain to private corporations.
Finally, petitioner asserts that he seeks to enjoin the loss of billions of pesos
in properties of the State that are of public dominion.
Issue: Whether the subject land can be alienated?
Held: Yes. Art. 422. Property of public dominion, when no longer intended for
public use or for public service, shall form part of the patrimonial property of
the State.
Again, the government must formally declare that the property of public
dominion is no longer needed for public use or public service, before the
same could be classified as patrimonial property of the State. [59] In the case
of government reclaimed and marshy lands of the public domain, the
declaration of their being disposable, as well as the manner of their
disposition, is governed by the applicable provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property
of public dominion those properties of the State which, without being for
public use, are intended for public service or the development of the
national wealth. Thus, government reclaimed and marshy lands of the
State, even if not employed for public use or public service, if developed to
enhance the national wealth, are classified as property of public dominion.
PEAs charter, however, expressly tasks PEA to develop, improve,
acquire, administer, deal in, subdivide, dispose, lease and sell any and all

The provision in PD No. 1085 stating that portions of the reclaimed


lands could be transferred by PEA to the contractor or his assignees
(Emphasis supplied) would not apply to private corporations but only to
individuals because of the constitutional ban. Otherwise, the provisions of PD
No. 1085 would violate both the 1973 and 1987 Constitutions.

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