CASE DIGESTS IN certificate of sale.
Municipal court
PROPERTY
Prepared by: Angelica C. Romero
Norfatimah Sunggod
(NOTE: Those with parentheses are
either additional info or doctrine)
GAVINO A. TUMALAD and
GENEROSA R. TUMALAD vs
ALBERTA VICENCIO and
EMILIANO SIMEON
Facts:
On Sep 1, 1955, Vicencio and
Simeon executed a chattel mortgage
in favor of Tumalad over their house
of strong materials located at
Quiapo, Manila over Lot Nos 6B and
7B, Block 2554, which were being
rented from Madrigal & Company,
Inc. It was also agreed that in
default the payment of any
amortizations would cause the
remaining unpaid balance to become
immediately due and payable, the
Sheriff of the City of Manila or any of
his deputies is empowered and
authorized to sell all the mortgagor’s
property after the necessary
publication in order to settle the
financial debts, plus interest and
yearly fees.
When Vicencio & Simeon defaulted
in paying, the mortgage was
extrajudicially foreclosed, and on 27
Mar 1956, the house was sold at
public auction pursuant to the sent
contract. As highest bidder,
Tumalad were issued corresponding
eventually rendered a decision
ordering defendants to vacate the
premises described in the complaint.
During the pendency of the appeal to
the CFI, Vicencio and Simeon failed
to deposit rent for Nov 1956. As a
result, the court granted Tumalad’s
motion for execution, and it was
issued Jan 1957. However, the
judgement regarding the surrender of
possession to Tumalad could not be
executed because the subject house
had been already demolished on Jan
1957 pursuant to the order of court in
a separate civil case for ejectment
against the present defendants for
non-payment of rentals on the land
where the house was constructed.
Vicencio & Simeon predicate their
theory of nullity of the chattel
mortgage on two grounds: a) that
their signatures on the chattel
mortgage were obtained through
fraud, deceit, or trickery, and b) that
the subject matter of mortgage is a
house o strong materials, and being
an immovable, it can only be the
subject of a real estate mortgage and
not a chattel mortgage.
Issue: Whether the subject of chattel
mortgage, which is a house of strong
material and being an immovable, is
valid.
Held: Yes. The subject matter of
chattel mortgage is valid.
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, the property
together with its leasehold rights over
the lot on which it is constructed.
Although 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,
Vicencio & Simeon 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 be allowed to make an
inconsistent stand by claiming
otherwise.
Moreover, the subject house stood
on a rented lot to which Vicencio and
Simeon merely had a temporary right
as lessee, although this cannot in
itself alone determine the status of
the property, it does so when
combined with other factors to
sustain the interpretation that the
parties intended to treat the house as
personal property.
Finally, it is Vicencio and Simeon
themselves who are attacking the
validity of the chattel mortgage in this
case. The doctrine therefore applies
to the herein defendants, having
treated the subject house as
personal property.
FOR THE FOREGOING REASONS,
the decision appealed from is
reversed and another one entered,
dismissing the complaint. With costs
against plaintiffs-appellees.
(Certain deviations have been
allowed from the general doctrine
that buildings are immovable
property such as when through
stipulation, parties may agree to
treat as personal property those
by their nature would be real
property. This is partly based on the
principle of estoppel wherein the
principle is predicated on statements
by the owner declaring his house as
chattel, a conduct that may
conceivably stop him from
subsequently claiming otherwise. In
the case at bar, though there be no
specific statement referring to the
subject house as personal property,
yet by ceding, selling or transferring
a property through chattel mortgage
could only have meant that
defendant conveys the house as
chattel, or at least, intended to
treat the same as
such, so that they should not now
be allowed to make an
inconsistent stand by claiming
otherwise.)
Leung Yee vs Strong
Machinery Co 37 Phil 644
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 of Agricola, 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.
(Under 1473)
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)
Honesty Of Intention is the honest
lawful intent constituting good
faith. It implies a freedom 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.
Building separate from land
does not affect character as real
property; Registry of chattel
mortgage does not affect character
of the building and the machineries
installed therein
The Chattel Mortgage Law
contemplates and makes provision
for mortgages of personal property;
and the sole purpose and object of
the chattel mortgage registry is to
provide for the registry of "Chattel
mortgages," mortgages of personal
property executed in the manner and
form prescribed in the statute. The
building of strong materials in which
the machinery was installed was real
property, and the mere fact that the
parties seem to have dealt with it
separate and apart from the land on
which it stood in no wise changed its
character as real property. It follows
that neither the original registry in the
chattel mortgage registry of the
instrument purporting to be a chattel
mortgage of the building and the
machinery installed therein, nor the
annotation in that registry of the sale
of the mortgaged property, had any
effect whatever so far as the building
was concerned.)
STANDARD OIL VS JARANILLO
44Phil 631
FACTS: Gervasia de la Rosa, Vda.
de Vera, who was renting a parcel of
land in Manila, constructed a building
of strong materials thereon, which
she conveyed to Standard Oil
Company of New York by way of
chattel mortgage.
When the mortgagee presented the
deed to the Register of Deeds of
Manila for registration in the Chattel
Mortgage Registry, Joaquin Jaranillo,
the Registrar refused to allow the
registration on the ground that the
building was a real property, and
therefore could not be the subject of
a valid chattel mortgage.
ISSUES:
1. May the deed be registered in the
chattel mortgage registry?
2. Whether the interests conveyed in
the instrument are real or personal.
HELD:
1. Yes. The Registrar's duty is
MINISTERIAL in character.
There is no legal provision conferring
upon him any judicial or quasi-
judicial power to determine or qualify
the nature of the document
presented before him.
The determination of the nature of
the property lies with the courts of
justice, and not by the Register of
Deeds.
Moreover, the act of recording a
chattel mortgage operates as
constructive notice of the existence
of the contract, and the legal effects
of the contract must be discovered in
the instrument itself in relation with
the fact of notice. Registration adds
nothing to the instrument and affects
nobody's rights except as a specifies
of notice.
As such, the Registrar should
therefore accept the legal fees being
tendered, and place the document
on record.

2. Art.334 and 335 of the Civil Code
do not supply an absolute criterion
for discriminating between real and
personal property for the purpose of
applying the Chattel Mortgage Law.
It should also be noted that under
given conditions property may have
character different from that imputed
in said articles. Parties to a contract
may, by agreement, treat as
personal property that which by
nature would be real property.
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.
However, it should be reiterated that
the determination of the nature of the
property, with reference to the
placing of the document on record, is
neither a function or an authority
granted to the Registrar of the
Registry of Deeds.
DAVAO VS CASTILLO 61 PHIL 709
FACTS: Davao Sawmill Co.,
operated a sawmill. The land upon
which the business was conducted
was leased from another person. On
the land, Davao Sawmill erected a
building which housed the machinery
it used. Some of the machines were
mounted and placed on foundations
of cement. In the contract of lease,
Davo Sawmill agreed to turn over
free of charge all improvements and
buildings erected by it on the
premises with the exception of
machineries, which shall remain with
the Davao Sawmill. In an action
brought by the Davao Light and
Power Co., judgment was rendered
against Davao Sawmill. A writ of
execution was issued and the
machineries placed on the sawmill
were levied upon as personalty by
the sheriff. Davao Light and Power
Co., proceeded to purchase the
machinery and other properties
auctioned by the sheriff.
ISSUE : Are the machineries real or
personal property?
HELD : (Art.415)
Appellant should have registered its
protest before or at the time of the
sale of the property. While not
conclusive, the appellant's
characterization of the property as
chattels is indicative of intention and
impresses upon the property the
character determined by the parties.
Machinery is naturally movable.
However, machinery may be
immobilized by destination or
purpose under the following
conditions:
General Rule: The machinery only
becomes immobilized if placed in a
plant by the owner of the property or
plant.
▪ Immobilization cannot be made by
a tenant, a usufructuary, or
any person having only a
temporary right.
Exception: The tenant, usufructuary,
or temporary possessor acted as
agent of the owner of the premises;
or he intended to permanently give
away the property in favor of the
owner.
As a rule, therefore, the machinery
should be considered as Personal
Property, since it was not placed on
the land by the owner of the said
land.
DOCTRINE:
(Movables must be placed by the
owner
(It must be pointed out that Davao
Sawmill should have registered its
protest before or at the time of the
sale of this property. It must further
be pointed out that while not
conclusive, the characterization of
the property as chattels by Davao
Sawmill is indicative of intention and
impresses upon the property the
character determined by the parties.
In this connection the decision of the
court in the case of Standard Oil vs.
Jaramillo, whether obiter dicta or not,
furnishes the key to such a situation.
Immobilization of machinery; when
placed in plant by owner
Machinery which is movable in its
nature only becomes immobilized
when placed in a plant by the owner
of the property or plant, but not when
so placed by a tenant, a
usufructuary, or any person having
only a temporary right, unless such
person acted as the agent of the
owner. The distinction rests upon the
fact that one only having a temporary
right to the possession or enjoyment
of property is not presumed by the
law to have applied movable
property belonging to him so as to
deprive him of it by causing it by an
act of immobilization to become the
property of another.)
-APPLICATION OF THE PRINCIPLE
OF ESTOPPEL
MINERAL BUS COMPANY VS CITY
ASSESOR OF CDO
Facts: Respondent City Assessor of
Cagayan de Oro City assessed at
P4,400 petitioner’s equipment in its
repair or service shop. Petitioner
appealed the assessment to the
respondent Board of Tax Appeals on
the ground that the same are not
realty. The Board of Tax Appeals of
the City sustained the city assessor,
so petitioner herein filed with the
Court of Tax Appeals a petition for
the review of the assessment. The
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: Whether the Tax Court erred
in its interpretation of paragraph 5 of
Article 415 of the New Civil Code,
and holding that pursuant thereto,
the movable equipments are taxable
realties, by reason of their being
intended or destined for use in an
industry.
Held: Yes. Movable equipments, to
be immobilized in contemplation of
Article 415 of the Civil Code, must be
the essential and principal elements
of an industry or works which are
carried on in a building or on a piece
of land. Thus, where the business is
one of transportation, which is
carried on without a repair or service
shop, and its rolling equipment is
repaired or serviced in a shop
belonging to another, the tools and
equipments in its repair shop which
appear movable are merely
incidentals and may not be
considered immovables, and, hence,
not subject to assessment as real
estate for purposes of the real estate
tax.
Similarly, the tool and equipment in
question in this instant case are, by
their nature, not essential and
principal 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 equipment, 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.
Article 415 of the Civil Code requires
that the industry or works be carried
on in a building or on a piece of land.
But in the case at bar 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 the law. Said
equipment may not, therefore, be
deemed as real property.
Doctrine: Movable equipment, to be
immobilized in contemplation of
Article 415 of the Civil Code, must be
the essential and principal elements
of an industry or works which are
carried on in a building or on a piece
of land. Thus, where the business is
one of transportation, which is
carried on without a repair or service
shop, and its rolling equipment is
repaired or serviced in a shop
belonging to another, the tools and
equipment in its repair shop which
appear movable are merely
incidentals and may not be
considered immovables , and,
hence, not subject to assessment as
real estate for purposes of the real
estate tax.
Berkenkotter v. Cu Unjieng 61 phil
663
Facts: On 26 April 1926, the
Mabalacat Sugar Company obtained
from Cu Unjieng e Hijos, a loan
secured by a first mortgage applied to Cu Unjieng e Hijos for an
constituted on 2 parcels of land "with additional loan of P75,000 offeringas
all its buildings, improvements,sugar- security the additional machinery and
cane mill, steel railway, telephone equipment acquired by said Green
line, apparatus, utensils and and installed in the sugar central
whatever forms part or is a after the execution of the original
necessary complement of said mortgage deed, on 27 April 1927,
sugar-cane mill, steel railway, together with whatever additional
telephone line, now existing or that equipment acquired with said loan.
may in the future exist in said Green failed to obtain said loan.
lots.”On 5 October 1926, the Hence, above mentioned mortgage
Mabalacat Sugar Company decided was in effect.
to increase the capacity of its sugar
central by buying additional
machinery and equipment, so that Issue: Are the additional machines
instead of milling 150 tons daily, it also considered mortgaged?
could produce 250. Green proposed
to the Berkenkotter, to advance the
Held: Article 1877 of the Civil Code
necessary amount for the purchase
provides that mortgage includes all
of said machinery and equipment,
natural accessions, improvements,
promising to reimburse him as soon
growing fruits, and rents not
as he could obtain an additional loan
collected when the obligation falls
from the mortgagees, Cu Unjieng e
due, and the amount of any
Hijos, and that in case Green
indemnities paid or due the owner by
shouldfail to obtain an additional loan
the insurers of the mortgaged
from Cu Unjieng e Hijos, said
property or byvirtue of the exercise of
machinery and equipment would
the power of eminent domain, with
become security therefore, said
the declarations, amplifications, and
Green binding himself not to
limitations established by law,
mortgage nor encumber them to
whether the state continues in the
anybody until Berkenkotter be fully
possession of the person who
reimbursed for the corporation's
mortgaged it or whether it passes
indebtedness to him.Having agreed
into the hands of a third person. It is
to said proposition made in a letter
a rule, that in a mortgage of real
dated 5 October 1926, Berkenkotter,
estate, the improvements on the
on 9 October 1926, delivered the
same are included; therefore, all
sum of P1,710 to Green, the total
objects permanently attached to a
amount supplied by him to Green
mortgaged building or land, although
having been P25,750. Furthermore,
they may have been placed there
Berkenkotter had a credit of P22,000
after the mortgage was constituted,
against said corporationfor unpaid
are also included.
salary. With the loan of P25,750 and
said credit of P22,000, the Mabalacat
Sugar Co., Inc., purchased the (Yes. The installation of a machinery
additional machinery and and equipment in a mortgaged sugar
equipment.On 10 June 1927, Green 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.)
Pastor Ago v CA 6 SCRA 530
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.
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.
(Sawmill machineries and equipment
are real properties in accordance
with Art. 415 (5)
By reason of installment in a
building, the said sawmill
machineries and equipments
became real estate properties in
accordance with the provision of Art.
415(5) of the Civil Code. It is
interpreted similarly to the case of
Berkenkotter vs. Cu Unjieng e Hijos,
where the Court held that the
installation of the machinery and
equipment in the central of the
Mabalacat Sugar Company for use in
connection with the industry carried
by that company, converted the said
machinery and equipment into real
estate by reason of their purpose. In
the present case, the installation of
the sawmill machineries in the
building of the Golden Pacific
Sawmill, Inc., for use in the sawing of
logs carried on in said building, the
same became a necessary and
permanent part of the building or real
estate on which the same was
constructed, converting the said
machineries and equipments into
real estate within the meaning of
Article 415(5) of the Civil Code of the
Philippines.)
Makati Leasing and Finance Corp.,
vs Wearever Textile 122 SCRA
296
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 Leasing’s 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 textile’s 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 the parties to the
contract so agree and no innocent
third party will be prejudiced thereby,
there is absolutely no reason why a
machinery, which is movable in its
nature and becomes immobilized
only by destination or purpose, may
not be likewise treated as such. This
is really because one who has so
agreed is estopped from the
denying the existence of the
chattel mortgage.
In rejecting petitioner’s 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.
Jose Burgos vs. Chief of Staff
Facts:
Two warrants were issued against
petitioners for the search on the
premises of “Metropolitan Mail” and
“We Forum” newspapers and the
seizure of items alleged to have
been used in subversive activities.
Petitioners prayed that a writ of
preliminary mandatory and
prohibitory injunction be issued for
the return of the seized articles, and
that respondents be enjoined from
using the articles thus seized as
evidence against petitioner.
Petitioners questioned the warrants
for the lack of probable cause and
that the two warrants issued
indicated only one and the same
address. In addition, the items seized
subject to the warrant were real
properties.
Issue: Whether or not the two
warrants were valid to justify seizure
of the items.
Held:
The defect in the indication of the
same address in the two warrants
was held by the court as a
typographical error and immaterial in
view of the correct determination of
the place sought to be searched set
forth in the application. The purpose
and intent to search two distinct
premises was evident in the
issuance of the two warrant.
As to the issue that the items seized
were real properties, the court
applied the principle in the case of
Davao Sawmill Co. v. Castillo, ruling
“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 did 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.
However, the Court declared the two
warrants null and void.
Probable cause for a search is
defined as such facts and
circumstances which would lead a
reasonably discreet and prudent man
to believe that an offense has been
committed and that the objects
sought in connection with the offense
are in the place sought to be
searched.
The Court ruled that the affidavits
submitted for the application of the
warrant did not satisfy the
requirement of probable cause, the
statements of the witnesses having
been mere generalizations.
Furthermore, jurisprudence tells of
the prohibition on the issuance of
general warrants. (Stanford vs. State
of Texas). The description and
enumeration in the warrant of the
items to be searched and seized did
not indicate with specification the
subversive nature of the said items.
SERG’S PRODUCTS AND
GOQUIOLAY V.
PCI LEASING AND FINANCE (338
SCRA 499)
FACTS:
PCI filed a case for collection of
a sum of money as well as a wri
t of
replevin for the seizure of machin
eries, subject of a chattel mortgag
e executed by petitioner in favor of
PCI.
Machineries of petitioner were seiz
ed and petitioner filed a motion fo
r special protective order. It asserts
that the machineries were real
property and could not be subject of
a chattel mortgage.
HELD:
The machineries in question have b
ecome immobilized by destination
because they are essential and
principal elements in the industry,
and thus have become immovable in
nature. Nonetheless, they are still
proper subjects for a chattel
mortgage. Contracting parties may
validly stipulate that a real property
be considered as personal.
After agreement, they are conseque
ntly estopped from claiming
otherwise.
CALTEX PHILS. V. CENTRAL
BOARD OF ASSESSMENT
APPEALS (114 SCRA 296)
FACTS:
The City Assessor characterized the
items in gas stations of petitioner as
taxable realty. These items includ
ed underground tanks, elevated ta
nk, elevated water tanks, water
tanks, gasoline pumps, computing
pumps,
etc. These items are not owned b
y the lessor of the land wherein t
he
equipment are installed. Upon ex
piration of the lease agreement, t
he equipment should be returned in
good condition.
HELD:
The equipment and machinery as
appurtenances to the gas station
building or shed owned by Caltex
and which fixtures are necessary to
the operation of the gas station, for
without them the gas station would
be useless, and which have been
attached and fixed permanently to
the gas station site or
embedded therein, are taxable im
provements and machinery within
the meaning of the Assessment Law
and the Real Property Tax Code.
 Board of Assessment Appeals v.
MERALCO [G.R. No. L-15334.
January 31, 1964.]
Facts:
On 20 October 1902, the Philippine
Commission enacted Act 484 which
authorized the Municipal Board of
Manila to grant a franchise to
construct, maintain and operate an
electric street railway and electric
light, heat and power system in the
City of Manila and its suburbs to the
person or persons making the most
favorable bid. Charles M. Swift was
awarded the said franchise on March
1903, the terms and conditions of
which were embodied in Ordinance
44 approved on 24 March 1903.
Meralco became the transferee and
owner of the franchise. Meralco’s
electric power is generated by its
hydro-electric plant located at
Botocan Falls, Laguna and is
transmitted to the City of Manila by
means of electric transmission wires,
running from the province of Laguna
to the said City. These electric
transmission wires which carry high
voltage current, are fastened to
insulators attached on steel towers
constructed by respondent at
intervals, from its hydroelectric plant
in the province of Laguna to the City
of Manila. Meralco has constructed
40 of these steel towers within
Quezon City, on land belonging to it.
On 15 November 1955, City
Assessor of Quezon City declared
the aforesaid steel towers for real
property tax under Tax Declaration
31992 and 15549. After denying
Meralco’s petition to cancel these
declarations an appeal was taken by
Meralco to the Board of Assessment
Appeals of Quezon City, which
required Meralco to pay the amount
of 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 which rendered a decision
on 29 December 1958, ordering the
cancellation of the said tax
declarations and the City Treasurer
of Quezon City to refund to Meralco
the sum of P11,651.86. The motion
for reconsideration having been
denied, on 22 April 1959, the petition
for review was filed.
Issue:
Whether or not the steel towers of an
electric company constitute real
property for the purposes of real
property tax.
Held:
The steel towers of an electric
company don’t constitute real
property for the purposes of real
property tax.
Steel towers are not immovable
property under paragraph 1, 3 and 5
of Article 415.
The steel towers or supports do not
come within the objects mentioned in
paragraph 1, because they do not
constitute buildings or constructions
adhered to the soil. They are not
constructions analogous to buildings
nor adhering to the soil. As per
description, given by the lower court,
they are removable and merely
attached to a square metal frame by
means of bolts, which when
unscrewed could easily be
dismantled and moved from place to
place.
They cannot be included under
paragraph 3, as they are not
attached to an immovable in a fixed
manner, and they can be separated
without breaking the material or
causing deterioration upon the object
to which they are attached. Each of
these steel towers or supports
consists of steel bars or metal strips,
joined together by means of bolts,
which can be disassembled by
unscrewing the bolts and
reassembled by screwing the same.
These steel towers or supports do
not also fall under paragraph 5, for
they are not machineries or
receptacles, instruments or
implements, and even if they were,
they are not intended for industry or
works on the land.
Petitioner is not engaged in an
industry or works on the land in
which the steel supports or towers
are constructed.
The Supreme Court affirmed the
decision appealed from, with costs
against the petitioners.
MANILA ELECTRIC CO. V.
CENTRAL BOARD OF
ASSESSMENT APPEALS (114
SCRA 273)
FACTS:
Petitioner owns two oil storage ta
nks, made of steel plates wielded
and
assembled on the spot. Their bot
toms rest on a foundation consist
ed of compacted earth, sand pad as
immediate layer, and asphalt stratum
as top layer. The tanks merely sit on
its foundation.
The municipal treasurer of Batangas
made an assessment for realty tax
on the two tanks, based on the report
of the Board of
Assessors. MERALCO wished to
oppose this assessment as they
averred that the tanks are not real
properties.
HELD:
While the two storage tanks are n
ot embodied in the land, they ma
y
nevertheless be considered as im
provements in the land, enhancing
its utility and rendering it useful to
the oil industry.
For purposes of taxation, the term
real property may include things,
which
should generally be considered as
personal property. it is familiar
phenomenon to see things classifi
ed as real property for purposes
of
taxation which on general principle
may be considered as personal
property.
SIBAL V. VALDEZ
50 PHIL 512
FACTS:
The Deputy Sheriff, through a writ
of execution, attached the person
al properties of Sibal, including the
sugar cane in question in the 7
parcels of land described in a
complaint. The personal properties
were then sold in public auction,
including the sugar canes. Included
also in those attached
were real properties wherein 8 out
of the 11 parcels of land, house
and camarin were bought by Valdez
through the public auction. He also
bought the sugar cane in question.
HELD:
Generally, sugar cane comes und
er the classification of “ungathered
products” under real properties in
the CC. However, under certain
conditions, it may be considered a
s personal property. For purpose
s of
attachment and execution, as well
as for the purposes of the Chattel
Mortgage Law, ungathered products
have the nature of personal property.
G.R. No. L-16797, Enriquez et al. v.
Ramos et al., 7 SCRA 265
Direct appeal on points of law
from a decision of the Court of First
Instance of Rizal in its Civil Case No.
Q-4232.
The record is to the effect that
on 24 November 1958, Rodrigo
Enriquez and the spouses Urbano
Dizon and Aurea Soriano de Dizon
sold to Socorro A. Ramos, by a
notarial deed of even date, eleven
(11) parcels of land situated in Bago
Bantay, Quezon City, and covered
by their corresponding certificates of
title, for the stipulated price of
P101,000.00. The vendee paid
P5,000.00 down, P2,500.00 in cash,
and P2,500.00 by a check drawn
against the Philippine National Bank,
and agreed to satisfy the balance of
P96,000.00 within ninety (90) days.
To secure the said balance, the
vendee Socorro A. Ramos, in the
same deed of sale, mortgaged the
eleven parcels in favor of the
vendors. By way of additional
security, Socorro A. Ramos, as
attorney-in-fact of her children,
Enrique, Antonio, Milagros, and
Lourdes, and as judicial guardian of
her minor child Angelita Ramos,
executed another mortgage on Lot
No. 409 of the Malinta Estate.
Because of the vendee-mortgagor's
failure to comply with some
conditions of the mortgage, this
action for foreclosure of the
mortgage was filed by the vendors-
mortgagees in the court below, on 29
April 1959. Defendant Socorro
Ramos moved to dismiss, alleging
that the plaintiffs previously had filed
action against her in the Court of
First Instance of Manila on 24
February 1959 for the recovery of
P2,500.00 paid by check as part of
the down payment on the price of the
mortgaged lands; that at the time this
first suit was filed, the mortgage debt
was already accrued and
demandable; that plaintiffs were,
therefore, guilty of splitting a single
cause of action, and under section 4
of Rule 2 of the Rules of Court, the
filing of the first action for P2,500.00
was a defense that could be pleaded
in abatement of the second suit.
Upon opposition by the plaintiffs, the
Court of First Instance of Quezon
City denied the motion to dismiss;
but defendant Ramos repleaded the
averments as a special defense in
her answer. After trial, on 16
December 1959, the Court of First
Instance of Quezon City rendered
judgment against defendant Ramos;
ordered her to pay P96,000.00, with
12% interest from 24 February 1959
until payment, 10% of the amount
due as attorney's fees, and the costs
of the suit; and further decreed the
foreclosure sale of the mortgaged
properties in case of non-payment
within ninety (90) days.

Socorro Ramos appealed directly to
this Court, and here insists that the
action should be dismissed on
account of the alleged splitting of
appellee's cause of action, and that
the obligation not having fixed a
period, although one was intended,
the court below should have set first
a date of maturity before ordering
payment or foreclosure.
We find no merit in the appeal.
Wherefore, the parties respectfully
pray that the foregoing stipulation of
facts be admitted and approved by
this Honorable Court, without
prejudice to the parties adducing
other evidence to prove their case
not covered by this stipulation of
facts.
An examination of the first complaint
filed against appellant in the Court of
First Instance of Manila shows that it
was based on appellants' having
unlawfully stopped payment of the
check for P2,500.00 she had issued
in favor of appellees; while the
complaint in the present action was
for non-payment of the balance of
P96,000.00 guaranteed by the
mortgage. The claim for P2,500.00
was, therefore, a distinct debt not
covered by the security; and since
the mortgage was constituted on
lands situated in Quezon City, the
appellees could not ask for its
foreclosure in the Manila courts. The
two causes of action being different,
section 4 of Rule 2 does not apply.
On the second assignment of error:
the stipulation in the mortgage
contract that the obligation for
P96,000.00 was to be —
without interest, payable within
ninety (90) days from this date,
provided that in case of default it
shall bear interest at the rate of 12%
per annum, clearly fixes a date of
maturity, the stipulated twelve per
cent in case of default being nothing
more than a penalty, designed to
induce the debtor to pay on or before
the expiration of the ninety (90) days.
Hence, there was no call upon the
court to set another due date.
Finding no error in the judgment
appealed from, the same is affirmed,
with costs against appellants.
US V. CARLOS (21 PHIL 553)
FACTS:
Accused was charged with larceny or
the unlawful use of electric
current. He was found guilty.
HELD:
It is true that electricity is no long
er considered as fluid but its
manifestations and effects are like
those of gas, may be seen and
felt. The true test on whether of what
is a proper subject of larceny seems
to be not
whether the subject is corporeal o
r not but whether it is capable of
appropriation by another than the
owner. Electricity, is a valuable
article of merchandise, bought and
sold like other personal property and
is capable of appropriation by
another.
J. MORELAND, DISSENTING:
An electric current is not a tangible
thing, a chattel, but is a condition or
state on which a thing or chattel finds
itself; and that a condition or state
cannot be stolen independently of
the thing or chattel of which it is
a condition or state. That it is
chattels, which are subjects of
larceny and not
conditions. (Electricity is only
energy)
Usero v CA Digest
Facts:
This is a consolidated petition
assailing the decision of the Court of
Appeals (CA). Petitioners and the
private respondent are registered
owners of neighboring parcels of
land wherein between the lots is a
low-level strip of land with stagnant
body of water. Whenever there is a
storm or heavy rain, the water
therein would flood thereby causing
damage to houses of the Polinars
prompting them to build a concrete
wall on the bank of the strip of land
about 3meters from their house and
riprapped the soil in that portion.
The Useros claimed ownership of the
strip, demanded the halt of the
construction but the Polinars never
heeded believing that the strip is part
of a creek. However, the Polinars
offered to pay for the land. As the
parties still failed to settle, both filed
separate complaints for forcible
entry. The Municipal Trial Court ruled
in favor of the petitioner, while the
regional trial court reversed and
ordered the dismissal of the
complaint and confirmed the
existence of the creek between the
lots.
Issue:
Whether or not the disputed strip of
land is part of the creek hence part of
public domain
Held:
YES. Art. 420 of the Philippine New
Civil Code (NCC) provides for
properties which are part of public
domain. A creek is included in the
phrase "and others of similar
character". A creek, which refers to a
recess or arm of a river is a property
belonging to the public domain,
therefore not susceptible of private
ownership. Being a public water, it
cannot be registered under the
Torrens system under the name of
any individual.
BINALAY VS MANALO 195 SCRA
374
A sudden and forceful action like that
of flooding is not the alluvial process
contemplated in Art. 457. The
accumulation of the soil deposits
must be slow and hardly
imperceptible in order for the riparian
owner to acquire ownership thereof.
Also, the land where the accretion
takes place is adjacent to the banks
of the rivers (or the sea coast).
FACTS: Manalo acquired 2 lots
which were originally owned by
Judge Taccad from 2 different
people (the latter’s daughter and
from an earlier purchaser). These
lots were later consolidated into Lot
307, a total of 10.45 hectares. The
lot was beside the Cagayan River,
which, due to flooding, would place a
portion of the land underwater during
the rainy season (September to
December). On sunny days,
however, the land would be dried up
for the entire dry season (January to
August). When a survey of the land
was conducted on a rainy month, a
portion of the land that Manalo
bought was then underwater and
was thus left unsurveyed and
excluded from Lot 307.
The big picture is this: Cagayan
River running from south to north,
forks at a certain point to form two
braches (western and eastern) and
then unites at the other end, further
north, to form a narrower strip of
land. The eastern branch of the river
cuts through Lot 307, and is flooded
during the rainy season. The
unsurveyed portion, on the other
hand, is the bed of the eastern
branch. Note that the fork exists only
during the rainy season while the
“island”/elongated strip of land
formed in the middle of the forks
becomes dry and perfect for
cultivation when the Cagayan river is
at its ordinary depth. The strip of land
in the middle of the fork totaled 22.7
hectares and was labeled Lot 821-
822. Lot 821 is directly opposite Lot
307 and is separated by the eastern
branch of the river’s fork.
Manalo claims that Lot 821 belongs
to him by way of accretion to the
submerged portion of the land to
which it is adjacent. Petitioners
(Binalay, et al) who possess the Lot
821, on the other hand, insist that
they own it. They occupy the other
edges of the lot along the river bank
(i.e. the fertile portions on which they
plant tobacco and other agricultural
products) and also cultivate the
western strip during the summer.
Manalo filed 2 cases for forcible
entry which were both dismissed.
Later on, he filed a complaint for
quieting of title, possession, and
damages against petitioner. The trial
court and the CA ruled in favor of
Manalo, saying that Lot 821 and Lot
307 cannot be considered separate
and distinct from each other. They
reasoned that when the land dries up
for the most part of the year, the two
are connected. [Note: The CA
applied the ruling in Gov’t of the Phil
Islands vs. Colegio de San Jose,
which was actually inappropriate
because the subject matter in this
case was a lake so that the definition
of a “bed” was different.]
ISSUE: Whether or not Manalo owns
Lot 821 by way of accretion
RULING: No.
The disputed property is not an
accretion. It is the action of the heavy
rains that cause the highest ordinary
level of waters of the Cagayan River
during the rainy season. The
depressed portion is a river bed and
is thus considered property of public
domain.
The SC observed the following:
a) The pictures identified by Manalo
during his direct examination depict
the depressed portion as a river
bed. The dried up portion had dike-
like slopes (around 8m) on both
sides connecting it to Lot 307 and
Lot 821 that are vertical and very
prominent.
b) The eastern bed already existed
even before Manalo bought the land.
It was called “Rio Muerte de
Cagayan.”
c) Manalo could not have acquire
ownership of the land because article
420 of the civil code states that rivers
are property of public dominion. The
word “river” includes the running
waters, the bed, and the banks. [The
seller never actually owned that part
of the land since it was public
property]
d) The submerged area (22.72 ha) is
twice the area of the land he actually
bought. It is difficult to suppose that
such a sizable area could have been
brought about by accretion.
More importantly, the requisites of
accretion in article 457 were not
satisfied. These are: 1) that the
deposition of the soil or sediment be
gradual and imperceptible; 2) that it
be the result of the action of the
waters of the river (or sea); and 3)
the land where the accretion takes
place is adjacent to the banks of the
rivers (or the sea coast). The
accretion should’ve been attached to
Lot 307 for Manalo to acquire its
ownership. BUT, the claimed
accretion lies on the bank of the
river; not adjacent to Lot 307 but
directly opposite it – across the river.
Aside from that, the dike-like slopes
which were very steep may only be
formed by a sudden and forceful
action like flooding. The steep slopes
could not have been formed by the
river in a slow and gradual manner.
PILAPIL VS CA 216 SCRA 33
Government v. Cabangis 53 Phil.
112
FACTS: In 1986, A owned a parcel
of land, but because of the action of
the waves of Manila Bay, part of
said land was gradually submerged
in the sea. It remained submerged
until 1912 when the government
decided to make the necessary
dredging to reclaim the land from the
sea. As soon as the land had been
recovered A took possession of it.
ISSUE: To which does the
ownership of the reclaimed land
belong to?
HELD: The government owns the
reclaimed land in the sense that it
has become property of public
dominion, because in letting it
remained submerged, A may be said
to have abandoned the same.
Having become part of the sea or the
seashore, it became property for
public use. When the government
took steps to make it land again, its
status as public dominion remained
unchanged; therefore, A is not
entitled to the land.