GENERAL CONCEPTS separation of powers that come to bear in our analysis.

Divinagracias theory that

2. Divinagracia v. Consolidated Broadcasting System and People’s NTC has the presumed authority to cancel the licenses and CPCs issued to due
Broadcasting Service holders of legislative franchise to engage in broadcast operations would violate
G.R. No. 162272 separation of powers.
April 7, 2009
3. Laurel v. Abrogar (576 SCRA 41)
Facts: (original petition for certiorari of a decision of the Court of Appeals, 2006)
- CBS and PBS, two of the three networks that operate Bombo Radyo
Philippines, operate radio broadcasting services by virtue of their legislative Facts:
franchises. Under the RAs, there is common provision, aimed towards the PLDT, given a franchise by law, operates, manages and maintains
constitutional mandate to democratise ownership of public utilities, that CBS telecommunications services in the Philippines. Baynet Co. Ltd. sold “Bay Super
and PBS should offer 30% of its common stocks to the public. Following these Orient Cards” which permitted persons in Japan to place calls to the Philippines
laws, NTC thus granted provisional authorities to CBS and PBS. nearly at the cost of locally made calls, by the use of switching devices employed
by Baynet operators. Laurel, representative of Baynet Co., Ltd., was charged for
- Divinagracia then filed 2 complaints against CBS and PBS separately, and that
Theft, under RPC Art. 308, for allegedly taking, stealing, and using PLDT's
both stations failed to make the 30% public offering of their stocks as
international long distance calls by conducting International Simple Resale (ISR)
mandated by the RAs. For this failure, Divinagracia prayed to cancel the
– “a method of outing and completing international long-distance calls using
provisional authorities granted to CBS and PBS as well as in its legislative
lines, cables, antennae, and/or air wave frequency which connect directly to the
franchises. NTC dismissed, saying it was not competent to render a ruling on
local/domestic exchange facilities of the country where the call is destined”.
that issue, that the complaint was a collateral attack on the legislative
PLDT alleged that this service was stolen from them using their own equipment
franchise of CBS and PBS and that the same is more properly the subject of an
and caused damage to them amounting to P20,370,651.92. The Supreme Court is
action for quo warrant to be commenced by the SOLGEN in the name of the
called on to review the decision of the Court of Appeals, which stated that while
Republic of the Philippines.
business is generally an activity, it may be considered “property” and may
- Divinagracia counters that the NTC has the power to cancel the provisional therefore be the subject of theft.
authorities and CPCs or in effect the power to cancel the licenses that allow
broadcast stations to operate. Issue: W/N “business” may be considered “personal property” within the
meaning of Article 308 of the Revised Penal Code.
Issue: WON NTC has the authority to cancel provisional authorities and
certificates of public convenience it issued to legislative franchise holders? Held: NO
Ratio:
Held: No. Licenses issued by the NTC such as CPCs and provisional authorities The elements of Theft under Article 308 of the Revised Penal Code are:
are junior to the legislative franchise enacted by Congress. The licensing (a) the taking of personal property; (b) the said property belongs to another; (c)
authority of the nTC is not on equal footing with the franchising authority of the the taking be done with intent to gain; and (d) the taking be accomplished without
state through congress. The issuance of licenses by the NTC implements the the use of violence or intimidation of person/s or force upon things.
legislative franchises established by congress. NTC cannot, without clear and For the purposes of civil law, “personal property” may include those
proper delegation by congress, prevent the exercise of a legislative franchise by things intangible. In the Revised Penal Code, however, “personal property” must
withholding or cancelling the licenses of the franchisee. And the role of the be considered in tandem with the word “take” in the law. For a thing to be the
courts, through quo warranto proceedings, neatly complements the traditional subject of “taking” it must have physical or material existence and susceptible of
occupation; things that can be carried from the place they were found. There is
“taking” of personal property, and theft is consummated when the offender
unlawfully acquires possession of personal property even if for a short time; or if
such property is under the dominion and control of the thief. It is clear by these
reasons that the subject of theft must be a physical thing. A business is not such.
Even things that aren’t per se “tangible” such as gas and electricity may
be the subject of theft, because they can be given value as merchandise, and may
technically be taken and carried from place to place. Business is not of the same
“intangibility.” It is employment; it is a profession; it is an activity. The
P20,370,651.95 that PLDT claims to have been deprived of is not “business.”
This is the aggregate amount of opportunity cost and damages supposedly
suffered by PLDT. If anything was “taken,” it would have been the electronic
voice signals exchanged in the phone calls - which PLDT has no dominion over.
Finally, the Court cites laws in foreign countries which penalizes the theft
of “services” (which is of the same nature as “business”) in separate penal laws,
and is not prosecuted under their ordinary theft statutes. No such law exists yet in
the Philippines.
4. CHINA BANKING CORPORATION V. CA
Metropolitan Bank. Meanwhile, Pacific Multi Agro-Industrial Corporation and
Alfonso’s appeal was dismissed by the CA for failure to file brief.
Alfonso then executed a public instrument assigning right to redeem the 1/2
undivided portion to his son, Paulino Roxas Chua, which he redeemed on the
same day.
In relation with China Bank, another certificate of sale on execution was granted,
to which Paulino and Kiang Ming instituted a civil case against China Bank
averring that Paulino has a prior and better right over the rights, title and interest,
Alfonso having sold his right to redeem 1/2 of conjugal property in his favor, and
that the assignment was annotated at the back of the TCT. The trial court ruled in
favor of Paulino, staing that the assignment was made for a valuable
consideration and was executed two years before petitioner China Bank levied
the conjugal share of Alfonso on the conjugal property.
On appeal, the Court of Appeals affirmed the ruling of the trial court. It held that
petitioner China Bank had been remiss in the exercise of its rights as creditor; and
that it should have exercised its right of redemption.

Facts: Issue:
Alfonso Chua and wife Kiang Ming Chu Chua were owners of a residential land 1. W/N Alfonso's assignment was done in fraud of creditors and rescissible under
(TCT No. 410603) in San Juan, Metro Manila. On Feb. 2, 1984, a notice of levy Art 1387 (When a debtor alienates property by gratuitous title, it is a badge of
affecting said property was issued by Metropolitan Bank and inscribed and fraud when the donor did not reserve property to pay all his debts before the
annotated at the back of the TCT. Kiang Ming filed a complaint against the City donation.)
Sheriff of Manila and Metropolitan Bank, questioning the levy on the property,
saying that the property could not be levied on based on a judgment against Held/Ratio:
Alfonso Chua as it was conjugal property. The parties compromised saying that 1.Yes, there is a presumption of fraud in Alfonso's assignment of his right,
the levy was enforceable only up to 1/2 undivided portion pertaining to Alfonso’sleaving virtually nothing for his other creditors. In case of Oria v. Mcmicking, the
conjugal share. SC held that the fact that the transfer is made between father and son when there
is a large indebtedness is a badge of fraud. Although Paulino had paid valuable
China Bank filed with the RTC a collection for sum of money against Pacific consideration, it does not negate the presumption of fraud when it cannot be
Multi Agro Industrial Corp and Alfonso Chua for 3 promissory notes amounting shown to have been made with bonafide intent. In this case, Paulino was still
to P2.5M plus stipulated interest. The trial court ruled in favor of China Bank. living in the house with his parents and knew his father was heavily indebted.

Another notice of levy on execution of interest of Alfonso Chua of TCT 410603 “Property” under civil law comprehends every species of title, inchoate or
was issued in connection with Alfonso’s conjugal share. A certificate of sale complete, legal or equitable. After Alfonso's conjugal share in TCT 410603 was
covering the 1/2 undivided portion of the property was executed in favor of foreclosed by Metropolitan Bank, his only property was the right to redeem the
same, it forming part of his patrimony. Property under the civil law also Are the airlines liable for damages in the delay in delivery of the body?
contemplates rights, therefore, the assignment of the right can be held to be
included in Art 1837's alienation of property in fraud of creditors. Held:
Human Body as Property
5. Saludo Jr. vs CA
Facts:
After death of petitioner's mother, Crispina Saludo in Chicago Illinois, on Oct 23,
1976, arrangements were made to send her remains back to the Philippines.
Maria and Saturnino Saludo made arrangements to accompany their mother's
body back to the Philippines, with Pomierski SFH as shipper, contracting the
services of Continental Mortuary Air Services (CMAS) making the flights,
transfers, etc.
CMAS booked the shipments with Philippine Airlines. PAL then routed the
shipment on board a Transworld Airlines flight to go from Chicago through San
Francisco, then on board a PAL flight from San Francisco to Manila.
Through some mix up, upon arriving in San Francisco, Maria and Saturnino were
informed by Transworld Airlines employees, that Crispina's remains and another FACTS:
body were mixed up and now Crispina's body was in Mexico.
Petitioners are now holding PAL and Transworld Airlines liable, as CMAS had
booked the shipment with them, for the delay in delivery, if they were not given a
favourable explanation.
Petitioners fault the airlines for not exercising extraordinary diligence required by the complaint and averred that she delivered the total amount of
law resulting in the switching and misdelivery of the remains, causing delay and PHP7,490,325.10, but FGCI only accomplished 28% of the project.
consequently damages to them.
From the evidence, as contrary to petitioners saying that PAL had received the
cargo on Oct 26, 1976, the body intended to be shipped was only received on
October 28, 1976 and it was from that date that PAL became responsible for the
agreed cargo. Switching of caskets prior thereto was not caused by PAL.
Issue:
From the facts it can be gleaned that it was CMAS, not the airlines, who had
caused the mix-ups with the bodies, as they took and delivered the casket from
the airlines, and it being sealed, the airlines could only rely on the information
being given by CMAS.
However, the court awarded petitioners nominal damages of P40,000 as
Transworld Airlines had violated the degree of diligence required by law to
common carriers by not showing petitioners due courtesy in handling the
situation.
(Property portion: Paras says that human body is never property so… I’m sorry,
I’m not entirely sure how property is involved in this case…)
CLASSIFICATION OF PROPERTIES
1. Villasi v Garcia
Art. 415 (1) (Land, Buildings, Roands, and Constructions of All Kinds)
Petitioner Magdalena T. Villasi engaged the services of respondent Fil-Garcia
Construction, Inc. (FGCI) to construct a seven-story condominium building
located at Aurora Boulevard corner N. Domingo Street, Cubao, Quezon City.
FGCI initiated a suit for a collection of sum of money before RTC of Quezon
City. Villasi then filed an answer specifically denying the material allegations of
The RTC rendered a Decision finding that FGCI was able to preponderantly
establish by evidence its right to the unpaid accomplishment billings. However,
the CA reversed the decision of the RTC and ruled that an overpayment was
made by Villasi and thereby directed FCGI to return the amount that was paid in
excess.
FCGI then filed a case before the Court that the CA erred in rendering its
decision, while Villasi filed for a Motion for Execution of the CA decision, which
was favorably acted upon by the RTC. A Writ of Execution was issued on 28 While it is a hornbook doctrine that the accessory follows the principal,
April 2004 commanding the Sheriff to execute and make effective the CA that is, ownership of the property give the Right by Accession to
decision. everything which is produced thereby, or which is incorporated or
attached thereto, either naturally or artificially, such rule is not without
The Sheriff levied on a building located at No. 140 Kalayaan Avenue, Quezon
exception.
City, covered by Tax Declaration No. D-021-01458, and built in the lots
registered under Transfer Certificate Title Nos. 379193 and 379194. While the
building was declared for taxation purposes in the name of FCGI, the lots in In a case where there is a clear and convincing evidence to prove that the
which it was erected were registered in the names of the Spouses Filomeno principal and the accessory are not owned by one and the same person or
Garcia and Ermelinda Halili-Garcia (Spouses Garcia). entity, the presumption shall not apply. In a number of cases, we
recognized the separate ownership of the land from the building and
The Spouses Garcia filed an Affidavit of Third Party Claim and Motion to Set brushed aside the rule Accessory follows the Principal.
Aside Notice of Sale and Execution claiming that they are the lawful owners of
the property, which was erroneously levied upon by the sheriff. They argued that The Rule on Accession is not an ironclad dictum. When there are factual
the City Assessor mistakenly assessed the building covered by the levy in the and evidentiary evidence to prove that different persons own the building
name of the FGCI, which was opposed by Villasi who insisted that its ownership and the lot on which it stands, they shall be treated separately. As such,
belongs to FGCI and not the spouses Garcia as shown by the tax declaration.
the building or lot, as the case may be, can be made liable to answer for
On 24 February 2005, the RTC issued an Order directing the sherrif to hold the obligation of its respective owner
in abeyance the conduct of the sale on execution. Villasi then filed a petition
for Certiori with the CA arguing that the RTC gravely abused its discretion Villasi was able to satisfactorily establish ownership of FCGI thru the
in ordering the suspension of the sale of execution, which was dismissed by pieces of evidence she appended her position. While it is true that the tax
the appellate court. receipts and tax declarations are not incontrovertible evidence of
ownership, they constitute credible proof of claim of title of property. In
ISSUE: Buduhan v Pakurao, tax declarations or real tax payment property are not
Whether or not the Honorable Court of Appeals grievously erred in conclusive evidence of ownership, nevertheless, they are good indica of
upholding the decision of the Trial Court to suspend and hold in abeyance possession in the concept of an owner for no one in his right mind would
the Sale on Execution of the Buildings levied upon the basis of be paying taxes for a property that is not his actual or at least constructive
respondent’s affidavit of third-party claim possession. FGCI is an actual possession of the building and as the
payment of taxes coupled with actual possession of the land covered by
HELD: tax declaration strongly supports a claim of ownership.
The Court granted the petition. The Spouses Garcia failed to prove that
they have a bona fide title to the building in question. Aside from their The Court processes earlier collection suit between FGCI and Villasi were
postulation that as titleholders of the land, the law presumes them to be served, thru the former’s representative Filomeno Garcia, at No. 140
owners of the improvements built thereon, the Spouses Garcia were unable Kalayaan Avenue, Quezon City, where the subject property is located.
to adduce credible evidence to prove their ownership of the property.
This circumstance is consistent with the tax declaration in the name of Ladera. Hodges et al contend that the house being built on land owned by another
FCGI. person should be regarded in law as movable or personal property.

2. LADERA v. HODGES (No. 8027-R. September 23, 1952) *note: this is a

CA case; I couldn’t find the original so I’m lifting this really good digest Issue: Whether the house being built on land owned by another should be re-
from the net. garded as movable property.
Facts: Ladera entered into a contract with Hodges whereby the latter promised to
sell a lot subject to certain terms and conditions. In case of failure of the pur-
Held: According to Article 334 of the Civil Code (now 415), Immovable property
chaser to make a monthly payment within 60 days after it fell due, “this contract
are the following: “Lands, building, roads, and constructions of all kinds adhering
may be taken and considered as rescinded and annulled,” in which case all sums
to the soil;” Applying the principle Ubi lex non distinguit nec nos distinguere
of money paid would be considered rentals and the vendor shall be at liberty to
debemu, the law makes no distinction as to whether the owner of the land is or is
dispose of the parcel of land with all the improvements theron to any other person
not the owner of the building. In view of the plain terms of the statute, the only
in a manner as if this contract had never been made. After the execution of the
possible doubt could arise in the case of a house sold for demolition.
contract, Ladera built on a lot a house of mixed materials assessed at P4500.

In the case of immovables by destination, the code requires that they be placed by
Unfortunately, Ladera failed to pay the agreed installments, whereupon the appel-
the owner of the tenement, in order to acquire the same nature or consideration of
lant rescinded the contract and filed an action for ejectment. The MTC rendered a
real property. In cases of immovable by incorporation, the code nowhere requires
decision upon agreement of the parties- Ladera to vacate and surrender posses-
that the attachment or incorporation be made by the owner of the land. The only
sion of the lot and pay P10 a month until delivery of the premises. The court is-
criterion is union or incorporation with the soil.
sued an alias writ of execution and pursuant thereto the sheriff levied upon all
rights, interests, and participation over your house standing on the lot. The sheriff
posted the notices of the sale but did not publish the same in a newspaper of gen- Ladera did not declare his house to be a chattel mortgage. The object of the levy
eral circulation. or sale was real property. The publication in a newspaper of general circulation
was indispensible. It being admitted that no publication was ever made, the exe-
cution sale was void and conferred no title on the purchaser.
At the auction sale Ladera did not attend because she had gone to Manila and the
sheriff sold the property to Avelina Magno as the highest bidder. On July 6, 1948,
Hodges sold the lot to Manuel Villa and on the same day the latter purchased the The alleged purchaser at the auction sale, Magno, is a mere employee of the cred-
house from Magno for P200 but this last transaction was not recorded. itor Hodges and the low bid made by her as well as the fact that she sold the
house to Villa on the same day that Hodges sold him the land, proves that she
was merely acting for and in behalf of Hodges.
Ladera returned to Iloilo after the sale and learned of its results. She went to see
the sheriff and upon the latter’s representation that she could redeem the property,
she paid him P230 and the sheriff issued a receipt. It does not appear, however, It should be noted that in sales of immovables, the lack of title of the vendor
that this money was turned over to Hodges. Thereupon, Ladera spouses filed an taints the rights of subsequent purchasers. Unlike in sales of chattels and
action against Hodges, the sheriff, and the judgment sale purchasers, Magno and personalty, in transactions covering real property, possession in good faith is
Villa to set aside the sale and recover the house. The lower court ruled in favor of not equivalent to title.

3. Midway Maritime and Technological Foundation v. Castro
GR No 189061
August 6, 2014
Facts:
1. Louis Castro Sr., president of Cabanatuan City Colleges (CCC) owned
the two parcels of land
2. Both parcels mortgaged to Bancom Development Corp. (Bancom)
3. CCC agrees to 15 year lease to Castro Children (Respondents represented
by Marissa Castro)
4. Within 15 year lease Children build house (expire in 1992)
5. CCC fails to pay, Bancom foreclosed on the mortgage
6. Parcels of land sold in public Auction, Bancom highest bidder
7. Bancom assigned credit to Union Bank
8. Union Bank sought issuance of writ of possession, including residential
building
9. Castro Children opposed the issuance of the writ of possession
10. Court of Appeals (Castro v. Ca) ruled that the house is owned by Castro
Children, not to be included in writ
11. During Court of Appeals trial, the following happened (Case said “in the
meantime”, I assume it was while the case was pending)
a. Tomas Cloma purchases the two parcels of land from Union
Bank in auction (July 1993)
b. Tomas Cloma leased property to Midway Marine and
Technological Foundation (Petitioner, Midway)
c. Tomas Cloma sells land to daughter Adoracion Cloma (Wife of
Midway President Dr. Sabino Mangclimot)
12. Castro Children filed several suits against Midway
13. Amended Complaint on April 19, 2000, alleging:
a. They are the owners of the residential building, having lived
there from 1977 to 1985, when they left for United States and
instituted Josefino Castro (Uncle of Castro Children) as caretaker
b. Dr. Mangclimot, as president, leased the building from Lourdes
Castro (Mother of Castro Children)
c. Dr. Mangclimot, as president, failed to pay rent from August
1995 (Rent was Php6000 from June 1993, Php10k from October
1995)
14. Petitioner denied Castro ownership
15. Regional Trial Court of Cabanatuan City rendered judgment in favor of
Castro, declaring absolute ownership, ordered petitioner to pay underpaid
rentals
16. Court of Appeals confirmed RTC ruling
17. Petitioner contends that when Tomas Cloma bought the land, it included
improvements (aka House) depending on previous Ejectment case by
Castro against Midway which said the Transfer Certificates of Title
included all improvements (Ejectment case was denied)
ISSUE:
1) Was there a lease
2) Who owns the building
Ruling:
Yes. Whether or not a lease existed between the parties is a question of fact
answered by the RTC ruling. Once a contract of lease is proven to exist, the
lessee cannot overturn the conclusive presumption that the lessor has a valid title.
The fact that the land’s owner changed (From Castro Sr. to Bancom, to Union
Bank, to Tomas Cloma, to now petitioner) does not terminate the contract of lease
unless so stipulated or when the purchaser was unaware of the existence of the
lease. In fact, during the transfer of ownership, it is not improbable that both
parties were aware of the circumstances surrounding the sale as the previous
owners have leased the building from the Castros. Petitioners failed to prove the
inexistence of the lease. The Court also confirms that the respondent’s ownership
of the building in Castro, Jr. v CA. The ejectment case relied upon by petitioner
was concerned with the ejectment only, and must give way to the direct ruling of
the higher court with actual ownership as its direct subject matter. The purchase
of the land does not necessarily entail acquisition of the building as a building by
itself is an immovable property distinct from the land on which it is
constructed and therefore can be a separate subject of contracts.
The Court denied the petition, affirms RTC and CA ruling.
4. EVANGELISTA v. ALTO SURETY & INSURANCE Co., INC.
G.R. No. L-11139
April 23, 1958
FACTS: property for purposes of said contract. However, this view is good only insofar as
the contracting parties are concerned. It is based, partly, upon the principle of
On June 4, 1949, petitioner herein, Santos Evangelista, instituted a Civil Case estoppel. Neither this principle, nor said view, is applicable to strangers to said
against Ricardo Rivera for a sum of money. On the same date, he obtained a writ contract. Much less is it in point where there has been no contract whatsoever,
of attachment, which was levied upon a house, built by Rivera on a land situated with respect to the status of the house involved, as in the case at bar.
in Manila and leased to him on June 8, 1949. In due course, judgment was
rendered in favor of Evangelista, who, on October 8, 1951, bought the house at The house of mixed materials levied upon on execution, although subject of a
public auction held in compliance with the writ of execution issued in said case. contract of chattel mortgage between the owner and a third person, is real
Evangelista sought to take possession of the house, Rivera refused to surrender it, property within the purview of Rule 39, section 16, of the Rules of Court as it has
upon the ground that he had leased the property from the Alto Surety & Insurance become a permanent fixture of the land, which is real property.
Co., Inc. and that the latter is now the true owner of said property.
The foregoing considerations apply, with equal force, to the conditions for
Alto Surety alleged that it has a better right to the house, because the sale made, the levy of attachment, for it similarly affects the public and third persons.
and the definite deed of sale executed, in its favor, on September 29, 1950 and
May 10, 1952, respectively, precede the sale to Evangelista (October 8, 1951) and 5. NAVARRO v PINEDA
the definite deed of sale in his favor (October 22, 1952). G.R. No. L-18456
November 30, 1963
CFI Manila rendered judgement in favor of Evangelista sentencing Rivera and Art. 415, No. 1 (Land, Buildings, Roads, and Constructions of all Kinds)
Alto Surety to deliver the house in question to Evangelista. On Appeal, the
Court of Appeals reversed the decision upon the ground that, although the writ FACTS:
of attachment in favor of Evangelista had been filed with the Register of Deeds of Rufino G. Pineda and his mother Juana Gonzales borrowed P2500 from
Manila prior to the sale in favor of respondent, Evangelista did not acquire Navarro, payable 6 months on June 14, 1959. To secure the indebtedness, Pineda
thereby a preferential lien, the attachment having been levied as if the house in executed a real estate mortgage on a parcel of land belonging to her in Tarlac,
question were immovable property while Pineda, by way of chattel mortgage, mortaged his 2-storey residential
house which was erected on a lot belonging to Atty. Castro in Tarlac, and one
ISSUE: motor truck registered in Pineda’s name. Both mortgages were contained in 1
- Whether a house, constructed by the lessee of the land on which it is built, instrument, registered in both the Office of the Register of Deeds and the Motor
should be dealt with, for purposes of attachment, as immovable property, or as Vehicles Office of Tarlac.
personal property. Despite being given 2 extensions, they failed and refused to pay the
obligation. Navarro filed a complaint for foreclosure of the mortgage and for
HELD: damages. The parties submitted a Stipulation of Facts where the defendants
The house is NOT a personal property, much less a debt, credit or other admitted (among other things) their indebtedness, the authenticity and due
personal property not capable of manual delivery, but IMMOVABLE execution of the Real Estate and Chattel Mortgages; that the indebtedness had
PROPERTY. A true building (not merely superimposed on the soil) is been unpaid since it was first due, that the instrument had been registered in the
immovable or real property, whether it is erected by the owner of the land or by a Registry of Property and Motor Vehicles Office, both of the province of Tarlac;
usufructuary or lessee. that the only issue in the case is whether or not the residential house, subject of
the mortgage therein, can be considered a Chattel and the propriety of the
Parties to a deed of chattel mortgage may agree to consider a house as personal attorney's fees.
 The lower court found for Navarro. The judgment was directly appealed
to the SC, where the defendants assigned 1 error: “In holding that the deed of
real estate and chattel mortgages appended to the complaint is valid,
notwithstanding the fact that the house of the defendant Rufino G. Pineda
was made the subject of the chattel mortgage, for the reason that it is erected
on a land that belongs to a third person.”
Appellants contend that article 415 of the New Civil Code, in classifying
a house as immovable property, makes no distinction whether the owner of the
land is or not the owner of the building; the fact that the land belongs to another
is immaterial, it is enough that the house adheres to the land; that in case of
immovables by incorporation, such as houses, trees, plants, etc; the Code does
not require that the attachment or incorporation be made by the owner of the
land, the only criterion being the union or incorporation with the soil. In other
words, it is claimed that "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." Appellants argue that since only movables can be the subject of a
chattel mortgage then the mortgage in question which is the basis of the present
action, cannot give rise to an action for foreclosure, because it is nullity.
ISSUE: 6. TUMALAD V. VICENCIO
1. Whether or not the residential house can be considered a chattel and No. L-30173
the property of the attorney’s fees. September 30, 1971
HELD:
1. YES.
The trial court predicated its decision declaring the deed of chattel
mortgage valid solely on the ground that the house mortgaged was erected on
the land which belonged to a third person, but also and principally on the
doctrine of estoppel, in that "the parties have so expressly agreed" in the
mortgage to consider the house as chattel "for its smallness and mixed
materials of sawali and wood."
The view that parties to a deed of chattel mortgagee may agree to
consider a house as personal property for the purposes of said contract, "is
good only insofar as the contracting parties are concerned. It is based partly,
upon the principles of estoppel ..." The principle is predicated on statements
by the owner declaring his house to be a chattel, a conduct that may
conceivably estop him from subsequently claiming otherwise. The doctrine,
therefore, is that although in some instances, a house of mixed materials has
been considered as a chattel between them, has been recognized, it has been a
constant criterion nevertheless that, with respect to third persons, who are not
parties to the contract, and specially in execution proceedings, the house is
considered as an immovable property.
The house in question was treated as personal or movable property by
the parties to the contract themselves. In the deed of chattel mortgage,
appellant Rufino G. Pineda conveyed by way of "Chattel Mortgage" "my
personal properties", a residential house and a truck. The mortgagor himself
grouped the house with the truck, which is, inherently a movable property.
The house which was not even declared for taxation purposes was small and
made of light construction materials: G.I. sheets roofing, sawali and wooden
walls and wooden posts; built on land belonging to another.
Where a house stands on a rented land belonging to
another person, it may be the subject matter of a chattel mortgage as
personal property if so stipulated in the document of mortgage, and in
an action by the mortgagee for the foreclosure, the validity of the chattel
mortgage cannot be assailed by one of the parties to the contract of
mortgage.
FACTS:
On September 1, 1955, the Vicencio (and Simeon) executed a chattel
mortgage in favor of the Tumalads over their house of strong materials located at
Quiapo, Manila, which they rented from Madrigal & Company, Inc. The
mortgage was executed to guarantee their P4,800 loan from the Tumalads which
was payable within one year at 12% per annum. The mode of payment agreed
upon was P150 monthly, with the lump sum of P3,150 payable on or before
August 1956. They also agreed that a default in payment of any of the
amortizations would cause the remaining unpaid balance to become immediately
due and payable and that the Chattel Mortgage will be enforceable in accordance
with the provisions of Special Act No. 31315.
When Vicencio defaulted in payment, the house was sold at public
auction on March 27, 1956 and the Tumalads, as the highest bidder, were issued
the corresponding certificate of sale. They afterwards commenced a civil case
against Vicencio in the municipal court and sought to have the house vacated, to
have its possession surrendered to them, and to have Vicencio pay a monthly rent
of P200 from the time the house was sold up to the time its possession was
surrendered.
The lower courts ruled for the Tumalads however the judgment regarding
the surrender of possession could not be executed because the house had already
been demolished on January 14, 1957 pursuant to the court order for ejectment
against Vicencio in a separate civil case for ejectment for non-payment of rentals
on the land on which the house was constructed.
On October 7, 1957, the appellate court of First Instance rendered a
similar decision which was appealed by Vicencio to the CA which, in turn,
certified the appeal to the SC.
ISSUE:
2. Whether the municipal court from which the case originated had
jurisdiction to adjudicate the same.
3. Whether the defendants are, under the law, legally bound to pay rentals to 2. No.
the plaintiffs during the period of 1 year provided by law for the
redemption of the extrajudicially foreclosed house.
HELD:
1. Yes.
Vicencio questions the jurisdiction of the municipal court from which the
case originated, and consequently, the appellate jurisdiction of the CFI,
on the theory that the chattel mortgage is void ab initio as (a) their
signatures therein were obtained through fraud, deceit, or trickery, and
that (b) the subject matter of the mortgage is a house of strong
materials, an immovable, which can only be the subject of a real
estate mortgage and not a chattel mortgage. It thus follows that the
foreclosure and the consequent auction sale are also void and the
ownership of the house still remained with him. He argues that the issue
of ownership must first be adjudicated to determine possession hence; it
is the CFI which has jurisdiction and not the municipal court.
(a) The charge of fraud, deceit, or trickery are not supported by
evidence and are mere allegations and even granting that it is true, fraud
or deceit does not render a contract void ab initio but only voidable 7. Lopez v. Oposa Jr.
pursuant to a proper action in court. There is nothing on record to show February 28, 1958
that the mortgage has been annulled nor that steps were taken to nullify
the same.
(b) Vicencio also claims that even if there was no fraud, deceit or
trickery, the chattel mortgage was still void ab initio because only
personal properties can be subject of a chattel mortgage. While the
inclusion of the building, separate and distinct from the land, in the
enumeration of real properties under Art. 415, CC means that a building
by itself is an immovable, it is undeniable that the parties to a
contract may by agreement treat as personal property that which by
nature would be real property. Also, it is now settled that an object
placed on land by one who had only temporary right to the same, such as
a lessee or usufructuary, does not become immobilized by attachment.
In their contract, Vicencio, by ceding selling or transferring the
house by way of chattel mortgage, could only have meant to convey it as
chattel, or at least, intended to treat it as such and thus he should not now
be allowed to claim otherwise.
The parties specifically stipulated that the chattel mortgage will
be enforceable in accordance with the provisions of Special Act No.
3135, Sec. 6 of which provides that the debtor-mortgagor (Vicencio)
may, at any time within one year from the date of auction sale, redeem
the property sold at the extrajudicial foreclosure sale. Further, while Sec.
7 allows the purchaser (Tumalads) to obtain form the court the
possession during the period of redemption by filing a petition with the
proper CFI and furnishing a bond, the Tumalads did not comply with
such and thus they cannot claim possession during the period of
redemption as a matter of right.
Since the Tumalads’ right to possess was not yet born at the
filing of the complaint (as the period of redemption had not yet expired
and the Tumalads did not choose to take possession under Sec. 7), there
could be no violation and it follows that the courts erred in requiring
Vicencio to pay rents for the year following the foreclosure as well as
attorney’s fees.
The decision appealed from is thus reversed.
FACTS: Enrique López is doing business under the trade name of Lopez Castelo
Sawmill. Sometime in May, 1946, Vicente Orosa, Jr., dropped at Lopez's house
and invited him to make an investment in the theatre business under Plaza
Theatre, Inc. Plaza Theatre was erected on a piece of land formerly owned by
Vicente Orosa, Jr., and was acquired by the corporation. Although López
expressed his unwillingness to invest on the same, he agreed to supply the lumber
necessary for the construction of the proposed theatre, and at Orosa's behest and
assurance that the latter would be personally liable for any account that the said
construction might incur. López further agreed that payment therefor would be on
demand and not cash on delivery basis. Pursuant to said verbal agreement, López
delivered the lumber which was used for the construction of the Plaza Theatre.
Out of P62,255.85 cost of the materials, Orosa paid only P20,848.50, thus
leaving a balance of P41,771.35.
As López 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.,
Unknown to Lopez, 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 countersecurity. As the land at that time was not yet brought under
the operation of the Torrens System, the mortgage on the same was registered on
November 16, 1946. Subsequently, when the corporation applied for the
registration of the land under Act 496, such mortgage was not revealed and thus
Original Certificate of Title No. O391 was correspondingly issued on October 25,
1947, without any encumbrance appearing thereon.
Persistent demand from López for the payment of the amount due him caused
Vicente Orosa, Jr. to assign his 420 shares of stock of the Plaza Theater, Inc., in
favor of the Lopez but as the obligation still remained unsettled, López filed a
case against Vicente Orosa, Jr. and Plaza Theatre, Inc.
ISSUE: Whether a materialman's lien (a type of lien that gives a security interest
in property to someone who supplies materials used during work performed on
that property) for the value of the materials used in the construction of a building and Board of Tax Appeals in ruling that said equipments, though movable, are
attaches to said structure alone and does not extend to the land.
HELD: No. The material man’s lien could be charged only to the building for
which the credit was made or which received the benefit of refection. The
building is by itself an immovable property. In the absence of any specific Issue: WON the equipment are considered immovable property
provision 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. Interest of the mortgagee over the land is superior and cannot be
made subject to the material man's lien. Thus, the lien 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.
8. Mindanao Bus Company v City Assessor and Treasurer
GR No. L-17870
September 29, 1962
Facts:
This is a petition for the review of the decision of the Court of Tax
Appeals in holding that the petitioner Mindanao Bus Company is liable to the
payment of the realty tax of P4,400 on its maintenance and repair equipment such
as a Hobart Electric Welder Machine, a Storm Boring Machine, a Lathe machine
with motor, a Black and Decker Grinder, a PEMCO Hydraulic Press, a Battery
charger, and a D-Engine Waukesha-M-Fuel.
It was determined 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; that petitioner is the owner of the land where it maintains
and operates a garage for its TPU motor trucks; a repair shop; blacksmith and
carpentry shops, and with these machineries which are placed therein, its TPU
trucks are made; body constructed; and same are repaired in a condition to be
serviceable in the TPU land transportation business it operates; that these
machineries have never been 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 purposes for which petitioner has
never engaged in.
The Court of Tax Appeals sided with the decision of the City Assessor
immobilized by destination, in accordance with paragraph 5 of Article 415 of the
New Civil Code.
 • After April 23, 1979, the date of the execution of the second mortgage,
Held: NO EVERTEX purchased various
machines and equipments.
For movable equipment to be immobilized in contemplation of the law, it • Then, due to business reverses, EVERTEX filed insolvency proceedings. The
must first be "essential and principal elements" of an industry or works without CFI issued an order
which such industry or works would be "unable to function or carry on the declaring the corporation insolvent. All its assets were taken into the custody of
industrial purpose for which it was established." Therefore, those movable which the Insolvency Court.
become immobilized by destination because they are essential and principal • In the meantime, upon EVERTEX’s failure to meet its obligation to PBCom, the
elements in the industry can be distinguished from those which may not be so latter commenced
considered immobilized because they are merely incidental, not essential and extrajudicial foreclosure proceedings against EVERTEX. On December 15, 1982,
principal. the first public auction
In the case at bar, the tools and equipments in question in this instant case was held where petitioner PBCom emerged as the highest.
are, by their nature, not essential and principle municipal elements of petitioner's • On December 23, 1982, another public auction was held and again, PBCom was
business of transporting passengers and cargoes by motor trucks. They are merely the highest bidder.
incidentals — acquired as movables and used only for expediency to facilitate • PBCom then leased the entire factory premises to petitioner Ruby L. Tsai for
and/or improve its service. Even without such tools and equipments, its business P50,000.00 a month and
may be carried on, as petitioner has carried on, without such equipments, before subsequently sold the factory, lock, stock and barrel to Tsai for
the war. The transportation business could be carried on without the repair or P9,000,000.00, including the
service shop if its rolling equipment is repaired or serviced in another shop contested machineries.
belonging to another. • On March 16, 1989, EVERTEX filed a complaint for annulment of sale,
reconveyance, and damages with
the Regional Trial Court against PBCom, alleging that the extrajudicial
9. TSAI V. COURT OF APPEALS foreclosure of subject
GR. NO. 120098, OCTOBER 2, 2001 mortgage was in violation of the Insolvency Law.
Facts: • Further, EVERTEX averred that PBCom, without any legal or factual basis,
• On November 26, 1975, respondent Ever Textile Mills, Inc. (EVERTEX) appropriated the contested
obtained a P3,000,000.00 loan properties, which were not included in the Real and Chattel Mortgage nor in the
from Philippine Bank of Communications (PBCom) Chattel Mortgage and
• As security for the loan, EVERTEX executed in favor of PBCom, a deed of neither were those properties included in the Notice of Sheriff’s. The disputed
Real and Chattel Mortgage properties, which were
over the lot where its factory stands and the chattels located therein as valued at P4,000,000.00, are:
enumerated in a schedule attached • 14 Interlock Circular Knitting Machines, 1 Jet Drying Equipment, 1 Dryer
to the mortgage contract. Equipment, 1
• PBCom granted a second loan of P3,356,000.00 to EVERTEX. The loan was Raisin Equipment and 1 Heatset Equipment.
secured by a Chattel • RTC and CA ruled in favor of Tsai.
Mortgage over personal properties enumerated in a list attached thereto which Issue:
were similar to those listed Whether or not the inclusion of the questioned properties in the foreclosed
in Annex A of the first mortgage deed. properties is proper and whether
or not the sale of these properties to petitioner Ruby Tsai is valid. APPEALS
Held: G.R. No. L-58469
No. Assuming arguendo that the properties in question are immovable by nature, May 16, 1983
nothing detracts the parties Article 415
from treating it as chattels to secure an obligation under the principle of estoppel.
As far back as Navarro v. FACTS:
Pineda, 9 SCRA 631 (1963), an immovable may be considered a personal To get financial accommodations from Makati Leasing and Finance Corp.,
property if there is a stipulation as Wearever Textile Mills, Inc. discounted and assigned several receivables with
when it is used as security in the payment of an obligation where a chattel Makati Leasing under a Receivable Purchase Agreement. As security, Wearever
mortgage is executed over it, as in executed a chattel mortgage over certain raw materials inventory as well as a
the case at bar. machinery described as an Artos Aero Dryer Stentering Range. Upon Wearever’s
In the instant case, the parties herein: default, Makati Leasing filed for extrajudicial foreclosure of the properties
(1) executed a contract styled as “Real Estate Mortgage and Chattel Mortgage,” mortgaged to it. However, the Deputy Sheriff was not able to enter Wearever’s
instead of just “Real Estate premises to seize the machinery.
Mortgage” if indeed their intention is to treat all properties included therein as Makati Leasing then filed a complaint for judicial foreclosure with the CFI
immovable, and Rizal. Although first restrained by Wearever’s motion for reconsideration, the
(2) attached to the said contract a separate “LIST OF MACHINERIES & writ of execution issued by the CFI was eventually enforced. When Wearever
EQUIPMENT”. filed a second motion for reconsideration, the court affirmed the earlier decision.
These facts, taken together, evince the conclusion that the parties’ intention is to On July 13, 1981, the sheriff removed the main drive motor of the subject
treat these units of machinery.
machinery as chattels. A fortiori, the contested after-acquired properties, which However, the Court of Appeals set aside the lower court’s orders and ordered
are of the same description as the return of the seized drive motor. It ruled that the said machinery cannot be the
the units enumerated under the title “LIST OF MACHINERIES & subject of replevin, much less of a chattel mortgage, because it is a real property
EQUIPMENT,” must also be treated as under Article 415 of the Civil Code. Since it had been bolted to the ground and
chattels. could only be removed by drilling it out or destroying the concrete floor, the
And, since the disputed machineries were acquired in 1981 and could not have taking of the main drive motor was all the sherriff could do to enforce the writ.
been involved in the 1975 Makati Leasing’s motion for reconsideration was denied.
or 1979 chattel mortgages, it was consequently an error on the part of the Sheriff
to include subject ISSUE:
machineries with the properties enumerated in said chattel mortgages. Whether or not the machinery is real property.
As the auction sale of the subject properties to PBCom is void, no valid title
passed in its favor. HELD:
Consequently, the sale thereof to Tsai is also a nullity under the elementary
NO.
principle of nemo dat quod non The case is similar to Tumulad v. Vicencio, which ruled that “a house of
habet, one cannot give what one does not have. strong materials may be considered as personal property for purposes of
executing a chattel mortgage thereon as long as the parties to the contract so
10. MAKATI LEASING AND FINANCE CORPORATION vs. agree and no innocent third party will be prejudiced thereby.” The case also
WEAREVER TEXTILE MILLS, INC., AND HONORABLE COURT OF stated that the parties, having treated the house as personalty, were now estopped
from declaring otherwise.
The Tumulad ruling applies to the present case. If a house can become
personal property under such circumstances, so much more so can machinery,
which is movable in its nature and becomes immobilized only by destination or
purpose. The characterization of the subject machinery as chattel by Wearever
shows intent to treat it as such and impresses such a character as determined by
the parties upon the property.
Although the house was built on land that the house’s owner did not own,
such is of no consequence. When the law makes no distinction as to the
ownership of the land on which the house is built, the Court cannot make such
distinction.
Lastly, one who has so agreed is estopped from denying the existence of the
chattel mortgage. Wearever alleges that it never made specific representation of
the machinery as personal property and only signed (at the order of petitioner) a
blank, printed form of chattel mortgage. However, the status of the machinery
was never raised as an issue before, and moreover, Wearever had already
benefited from the contract. Equity dictates that one cannot be allowed to impugn
the efficacy of the chattel mortgage after he has benefited therefrom.
WHEREFORE, the CA’s decision is reversed and the orders of the lower court
are reinstated.
11. Sergs Products v. PCI Leasing
Facts:
- PCI Leasing filed with the RTCQC a complaint for a sum of money with an
application for a writ of
replevin
- respondent judge issued a writ of replevin 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
- in implementation of said writ, the sheriff proceeded to petitioner’s factory,
seized one machinery with the
word that he would return for the other machineries
- petitioners filed a motion for special protective order, invoking the power of the property be considered as personal.
court, praying for a directive for the sheriff to defer enforcement of the writ of
replevin.
- This motion was opposed by PCI Leasing, on the ground that the properties
were still personal and therefore still subject to seizure and a writ of replevin
- In their Reply, petitioners asserted that the properties sought to be seized were
immovable. They further stated that PCI Leasing was estopped from treating
these machineriesas personal because the contracts in which the alleged
agreement were embodied were totally sham and farcical
- The sheriff again sought to enforce the writ of seizure and take possession of the
remaining properties. He
was able to take two more, but was prevented by the workers from taking the
rest.
- The CA held that the subject machines were personal property, and
that they had only been leased, not owned, by petitioners.
ISSUES:
1. WON the machineries imported and purchased by Sergs are real properties.
HELD:
1. No.
Rule 60 of the Rules of Court provides that writs of replevin are issued
for the recovery of personal property only. Art. 415 on the other hand states that
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.
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. 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.
The machines, however, are still proper subjects of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a real
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.
 In the present case, the Lease Agreement clearly provides that the
machines in question are to be considered as personal property. Clearly then,
petitioners are estopped from denying the characterization of the subject
machines as personal property. Under the circumstances, they are proper subjects
of the Writ of Seizure. It should be stressed, however, that our holding—that the
machines should be deemed personal property pursuant to the Lease Agreement
—is good only insofar as the contracting parties are concerned.
12. Burgos v. Chief of Staff
GR No. L64261
December 26, 1984
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. 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 in their Quezon City property.
Petitioners assail the validity of the seizure based on the following grounds:
18. Although the warrants were directed against Jose Burgos, Jr. alone,
articles belonging to his copetitioners Jose Burgos, Sr., Bayani Soriano
and the J. Burgos Media Services, Inc. were seized.
19. Real properties were seized under the disputed warrants.
20. The warrant of search was wrongfully issued because respondent judge
failed to conduct an examination under oath or affirmation of the
applicant and his witnesses. Also, search Warrants No. 2082[a] and No.
2082[b] were used to search two distinct places: No. 19, Road 3, Project
6, Quezon City and 784 Units C & D, RMS Building, Quezon Avenue,
Quezon City, respectively.
Issue:
- W/N personal properties of persons other than the one indicated in the warrant
may be seized.
- W/N machineries are immovable properties.
- W/N the warrant was rightfully issued following the requirements of
examination, place and probable cause.
Held:
- YES - Rules of Court, enumerates the personal properties that may be seized
under a search warrant, to wit:
a) Property subject of the offense;
b) Property stolen or embezzled and other proceeds or fruits of
the offense; and
c) Property used or intended to be used as the means of
committing an offense.
The above rule does not require that the property to be seized should
be owned by the person against whom the search warrant is directed.
It may or may not be owned by him. It is sufficient that the person
against whom the warrant is directed has control or possession of the
property sought to be seized,
- NO – the machineries in this case are NOT real/immovable properties and
thus were capable of being rightfully seized.
Under Article 415[5] of the Civil Code of the Philippines,
“machinery, receptables, 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.
Following the case of Davao Sawmill Co. v Castillo, machinery which
is movable by nature becomes immovable 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.
HOWEVER:
- Warrant was wrongfully issued. The issue with regard to the lack of
examination is moot since petitioners themselves conceded during a previous
hearing that an examination had indeed been conducted by respondent judge
of Col. Abadilla and his witnesses. To the issue of using identical warrants to
search two distinct places, the court finds it as a mere typographical error. Two
search warrants were applied for and issued because the purpose and intent
were to search two distinct premises. It would be quite absurd and illogical for
respondent judge to have issued two warrants intended for one and the same
place. Besides, the addresses of the places sought to be searched were
specifically set forth in the application. Warrant is null and void for the lack
of probable cause. 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. 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.
13. B. H. BERKENKOTTER vs. CU UNJIENG E HIJOS
No. 41643; July 31, 1935
Facts:
21. Mabalacat Sugar Co., Inc. obtained from Cu Unjieng e Hijos, a loan
secured by a first mortgage constituting two parcels of land, “with all its
buildings, improvements, sugar-cane mill, …”
22. Mabalacat Sugar Co., Inc., through its president B. A. Green, thereafter
borrowed money from B. H. Berkenkotter in the amount of P 1, 710
pesos in order to buy machinery and equipment for the sugar central.
23. This additional machinery and equipment would allow the sugar central
to increase its production from milling 150 tons daily to 250 tons.
24. Green bound himself to Berkenkotter to hold such machinery and
equipment as security for the payment of Berkenkotter’s credit, with
Green promising to refrain from mortgaging or encumbering the
machinery until Berkenkotter has been fully paid.
25. Green then applied for another loan of P75,000 from Cu Unjieng e Hijos,
offering as a security the machinery and equipment that he installed after
the original mortgage deed. He failed to obtain the loan.
26. Green was therefore unable to pay back Berkenkotter, and Berkenkotter
now asserts that he is the one (not the Cu Unjieng e Hijos) who owns the
additional machinery and equipment since Green originally offered it to
him as security.
27. Court of First Instance of Manila ruled against Berkenkotter, hence this
current appeal.
Issue:
- W/N the additional machinery and equipment are included in the original
mortgage secured by Cu Unjeng e Hijos
Held/ Ratio:
- YES. The additional machinery and equipment are considered improvements
on the mortgaged property, which are included in the mortgage. Art. 1877 of
Civil Code: the installation of a machinery and equipment in a mortgaged
sugar central, for the purpose of carrying out the industrial functions and
increasing production, constitutes a permanent improvement on sugar
central and subjects such machinery and equipment to the mortgage.
- The machinery and equipment fall under real property in accordance with Art.
334, par 5, since it was intended by the owner for use in connection with his
industry and trade.
- It cannot be said that the incorporation of the machinery was not permanent in
character because without such machinery, the sugar central would be unable
to function or carry on the industrial purpose for which it was established.
- The fact that Green bound himself to Berkenkotter to use the machinery as
security for Berkenkotter’s credit and refrain from mortgaging such machinery
DOES NOT alter the permanent character of the incorporation of such
machinery.
- Berkenkotter does not have ownership of said machinery and equipment, but
he is vested simply with the right of redemption.
- WHEREFORE, the decision of CFI of Manila is affirmed.
14. Star Two (SPV-AMC), Inc. v. Paper City Corporation of the Philippines
G.R. No. 169211
FACTS:
28. In the year 1990, Paper City applied was granted four loans and credit
accommodations by Rizal Commercial Banking Corporation (RCBC).
The loans were secured by four Deeds of Continuing Chattel Mortgage
on its machineries and equipment’s found inside its paper plants.
However after a period, RCBC filed for a Cancellation of Deeds of
Continuing Chattel Mortgage.
29. In 1992, RCBC as the trustee bank, together with Metrobank and Union
Bank entered into a Mortgage Trust Indenture (MTI) with Paper City.
This MTI was later on amended and supplemented three (3) times,
wherein the loan was increased and included the same mortgages with an
additional building and other improvements in the plant site.
30. Paper City was able to comply with the loans but defaulted in 1997 due
to an economic crisis.
31. RCBC filed a petition for extra-judicial foreclosure against the real estate
executed by Paper City including all the improvements because of the
default in payment.
32. The property was foreclosed and subject to auction wherein the 3 banks
and the highest bidder were issued Certificates of Sale. Paper City filed a
complaint alleging that the sale was null and void due to lack of prior
notice.
33. During the pendency of the complaint, Paper City filed a motion to
remove machinery out of the foreclosed land and building, that the same
were not included in the foreclosure of the real estate mortgage.
34. The Trial court denied the motion, ruling that the machineries were
included. Paper City filed for a motion of reconsideration which the trial
court granted. RCBC then filed for a motion of reconsideration claiming
that Paper City gave its consent to consider the machineries and
equipment as real properties when they signed the MTI and should be
treated as real properties as agreed upon. The CA affirmed the orders of
the trial courts on the grounds that the MTI contained no such express
agreement that these properties were to be considered as real property.
ISSUE:
- W/N the Mortgage Trust Indenture as well as the subsequent supplementary
amendments included in its coverage of mortgaged properties the subject
machineries and equipment
- W/N the machineries and equipment were considered real properties and
should therefore be included in the extra-judicial foreclosure
HELD:
- YES. Repeatedly, the parties stipulated that the properties mortgaged by Paper
City to RCBC are various parcels of land including the buildings and existing
improvements thereon as well as the machineries and equipments, which as
stated in the granting clause of the original mortgage, are "more particularly
described and listed that is to say, the real and personal properties listed in
Annexes ‘A’ and ‘B’ x x x of which the Paper City is the lawful and registered
owner." As held in Gateway Electronics Corp. v. Land Bank of the Philippines,
the rule in this jurisdiction is that the contracting parties may establish any
agreement, term, and condition they may deem advisable, provided they are
not contrary to law, morals or public policy.
- YES. Contrary to the finding of the CA, the Extra-Judicial Foreclosure of
Mortgage includes the machineries and equipments of Paper City. Considering
that the Indenture which is the instrument of the mortgage that was foreclosed
exactly states through the Deed of Amendment that the machineries and
equipments listed in Annexes "A" and "B" form part of the improvements
listed and located on the parcels of land subject of the mortgage, such
machineries and equipments are surely part of the foreclosure of the "real
estate properties, including all improvements thereon" as prayed for in the
petition. The real estate mortgages which specifically included the
machineries and equipments were subsequent to the chattel mortgages.
Without doubt, the real estate mortgages superseded the earlier chattel
mortgages.
The real estate mortgage over the machineries and equipments is within
the classification of such properties under the Civil Code of the
Philippines as immovable property. Thus:
 Article 415. The following are immovable property: - In another action between Davao Light and Davao Sawmill, judgement was
rendered against Davao Sawmill. In this judgement, a writ of execution was
(1) Land, buildings, roads and constructions of all kinds adhered to the issued and the machineries of Sawmill were levied upon as personalty by the
soil; sheriff. Davao Light then proceeded to purchase the machinery and other
properties auctioned by the sheriff.
xxxx
Issue:
(5) Machinery, receptacles, instruments or implements intended by the Are the Machineries real or personal property?
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 Held:
needs of the said industry or works; Personal Property.

Art. 415. Real Property consists of:

5. Machinery, receptacles, instruments or implements intended by the owner of
the tenement for an industry of 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.
15. Davao Saw Mill Co., Inc. v. Aproniano G. Castillo and Davao
Light & Power Co., Inc., Machinery is movable in nature and only becomes immobilised when placed
in a plant by the owner of the property, but not when it is placed only by a
G.R. No. L-40411 tenant, usufructuary, or any person having only a temporary right, unless
August 7, 1935 such person acted as the agent of the owner.

Facts: 16. Yap vs. Tañada

- Davao Saw Mill is the holder of a lumber concession from the Government of
the Philippine Islands. It has operated a sawmill in the site of Maa, barrio of G.R. No. L-32917
Tigatu in Davao. July 18, 1988
Article 415, par. 3
- However the land upon which the business was situated belonged to another Facts: Goulds Pumps International (Phil.), Inc. filed a complaint
person. Sawmill company erected a building on the land which housed the against Yap and his wife,
machinery used by it. Some of the machines were mounted and placed on seeking recovery of Pl,459.30 representing the balance of the price and
foundations of cement. installation cost of a
water pump in the latter's premises. The Cebu City Court ruled in favour of
- In the contract of lease, Davao Sawmill agreed to turn over free of charge all Goulds after Yap
improvements and buildings erected by it on the premises with the exception of failed to appear at the trial. Yap appealed to the Court of First Instance. The
machineries which shall remain with Davao Sawmill. appeal was assigned
to the sala of respondent Judge Tanada. Yap was declared in default by Order of
Judge Tanada,
for once again failing to appear at the pre-trial. Goulds presented evidence
exparte; and
judgment by default was rendered the following day by Judge Tanada requiring
Yap to pay
Goulds the unpaid balance with interest. Yap’s Motion for Reconsideration was
denied. On
October 15,1969 Judge Tanada issued an Order granting Goulds' Motion for
Issuance of Writ of
Execution dated October 14,1969, declaring the reasons therein alleged to be
meritorious. In
response, Yap filed an Urgent Motion for Reconsideration of the said Order. In
the meantime the
Sheriff levied on the water pump in question, and by notice dated November 4,
1969, scheduled
the execution sale thereof on November 14,1969. But in view of the pendency of
Yap's motion
for reconsideration of October 29,1969, suspension of the sale was directed by
Judge Tanada in
an order dated November 6,1969. It appears however that a copy of this Order
was not
transmitted to the Sheriff "through oversight, inadvertence and pressure of work"
of the Branch
Clerk of Court. So the Deputy Provincial Sheriff went ahead with the scheduled
auction sale and
sold the property levied on to Goulds as the highest bidder. Yap filed a Motion to
Set Aside
Execution Sale and to Quash Alias Writ of Execution. One of his arguments was
that the sale was
made without the notice required by Sec. 18, Rule 29 of the New Rules of Court,
“i.e. notice by
publication in case of execution of sale of real property, the pump and its
accessories being
immovable because attached to the ground with the character of permanency.”
The motion was
denied by the CFI.
Issue: Whether or not the pump and its accessories are immovable property
Held: No. Yap’s 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.” 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.
WHEREFORE, the petition is DENIED and the appeal DISMISSED, and the
Orders of
September 16, 1970 and November 21,1970 subject thereof, AFFIRMED in toto.
Costs against
petitioner.
17. Machinery & Engineering Supplies (MES) vs. CA (October 29, 1954)
Facts: Machinery filed a complaint for replevin in the CFI of Manila against Ipo
Limestone Co. (ILC), and Dr. Villarama, for the recovery of the machineries and
equipments sold and delivered to ILC at their factory in Bulacan. The respondent
judge issued an order, commanding Provincial Sheriff to seize and take
immediate possession of the properties. Two deputy sheriffs of Bulacan, the
president of MES (Ramon Roco), and a crew of technical men and laborers
proceeded to Bulacan, for the purpose of carrying the court’s order into effect.
Leonardo Contreras, Manager of ILC, and Pedro Torres, in charge thereof, met
the deputy sheriffs, and Contreras handed to them a letter addressed to Atty. Palad
(ex-officio Provincial Sheriff of Bulacan), protesting against the seizure of the
properties in question, on the ground that they are not personal properties.
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. But 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.
ILC filed an urgent motion 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 to the place where they were
installed. The deputy sheriffs returned the properties seized, by depositing them
along the road, near the quarry, of ILC without the benefit of inventory and
without re-installing them in their former position and replacing the destroyed
posts, which rendered their use impracticable.
MES complains that the respondent Judge had disregarded his manifestation that
equipments seized are MES' property until fully paid for and as such never
became immovable and ordinarily replevin may be brought to recover any
specific personal property unlawfully taken or detained from the owner thereof,
provided such property is capable of identification and delivery.
Issue: Whether or not the machineries and equipments were personal properties
and, therefore, could be seized by replevin.
Held: No. The special civil action known as replevin, governed by the Rules of
Court, is applicable only to “personal property.” The machinery and equipment in
question appeared to be attached to the land, particularly to the concrete
foundation of said premises, 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, also, to cut some of its wooden
supports. Moreover, 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 the said industry.” For these reasons, they were already
immovable property pursuant to paragraphs 3 and 5 of Article 415 of the Civil
Code.
18. Board of Assessment v. Manila Electric Co.
Facts: Meralco was assessed with real property tax on their steel towers that
carry electric transmission wires from their hydroelectric plant to Manila.
CTA upheld that (1) these steel towers were within the term “poles” which were
exempted from taxes under Meralco’s franchise, and that (2) the steel towers
were personal property.
Issue: (1) Should the steel towers be considered poles? (2) Are the steel towers
considered real property?
Ruling:
35. Yes, the steel towers are poles. "Pole" means "a long, comparatively
slender usually cylindrical piece of wood or timber, as typically the stem
of a small tree stripped of its branches; also by extension, a similar
typically cylindrical piece or object of metal or the like". “Poles”
includes "upright standards to the top of which something is affixed or by
which something is supported. Meralco’s poles steel supports consists of
a framework of four steel bars or strips which are bound by steel cross-
arms atop of which are cross-arms supporting five high voltage
transmission wires and their sole function is to support or carry such
wires. Thus, the steel towers are poles.
This interpretation is not new. Several courts of last resort in the US
have called these steel supports as electric poles.
36. No, the steel towers are not real property. It does not fall under paragraph
1 of Article 415 because they do not constitute buildings or constructions
adhered to the soil. They are not construction analogous to buildings nor
adhering to the soil. They are removable.
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.
These steel towers or supports do not also fall under paragraph 5, for they
are not machineries, receptacles, instruments or implements, and even if
they were, they are not intended for industry or works on the land.
19. MERALCO V. CBAA
L-47943
May 31, 1982
FACTS:
In 1969, a realty tax was imposed on two oil storage tanks installed by
Manila Electric Company (Meralco) on a lot in San Pascual, Batangas which it
leased in 1968 from Caltex (Phil.), Inc. With a total capacity of 566,000 barrels,
the tanks are used for storing fuel oil for Meralco's power plants.
According to Meralco, the storage tanks are not attached to its
foundation. It is not anchored or welded to the concrete circular wall; its bottom
plate is not attached to any part of the foundation by bolts, screws or similar
devices. In fact, each empty tank can be floated by flooding its location with
water 4ft deep.
On the other hand, according to the Central Board of Assessment
Appeals, while the tanks rest or sit on their foundation, the foundation itself and
the walls, dikes and steps, which are integral parts of the tanks, are affixed to the
land while the pipelines are attached to the tanks.
In 1970, the municipal treasurer of Bauan, Batangas required Meralco to
pay realty taxes on the two tanks based on an assessment made by the provincial
assessor, amounting to P431,703.96 from 1970 to 1974.
The Central Board of Assessment Appeals ruled that the tanks together
with the foundation, walls, dikes, steps, pipelines and other appurtenances
constitute taxable improvements. Meralco filed a motion for reconsideration,
which the Board denied. So, Meralco filed a special civil action of certiorari to
annul the Board's decision, contending that its storage tanks are not taxable real
property since: a) the tanks are not attached to the land; b) these were placed on
leased land, not on the land owned by Meralco; c) these tanks do not fall under
the kinds of real property in Art. 415 of the Civil Code, so they cannot be
categorized as realty by nature, by incorporation, by destination nor by analogy.
considered as real properties, thus they are subject to realty taxes.
This case is different from Board of Assessment Appeals vs. Manila
Electric Company, where Meralco's steel towers were not subject to realty tax,
since its steel towers were regarded as poles and under its franchise, Meralco's
poles are exempt from taxation. Also, the steel towers were not attached to any
land or building, but rather they were removable.
Therefore, the Court dismissed Meralco’s petition.
20. Haslem
21. Fels Energy Inc. v. The Province of Batangas
G.R. No. 168557
February 16, 2007
Facts:

ISSUE: Whether or not the storage tanks of Meralco are real properties, thus Before us are two consolidated cases, with the facts as follows:
taxable.
On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc.
HELD: YES. Sec. 2 of the Assessment Law provides that the realty tax is due over 3x30 MW diesel engine power barges moored at Balayan Bay in Calaca,
"on real property, including land, buildings, machinery, and other improvements" Batangas. Subsequently, Polar Energy, Inc. assigned its rights under the
not exempted in Sec. 3. Agreement to FELS. The NPC initially opposed the assignment of rights.
Sec. 28 of Real Property Tax Code similarly provides that real property
tax “shall be levied, assessed and collected in all provinces, cities and On August 7, 1995, FELS received an assessment of real property taxes on the
municipalities an annual ad valorem tax on real property, such as land, buildings, power barges from Provincial Assessor Lauro C. Andaya of Batangas City. The
machinery and other improvements affixed or attached to real property not assessed tax, which likewise covered those due for 1994, amounted
hereinafter specifically exempted.” to P56,184,088.40 per annum. FELS referred the matter to NPC, reminding it of
And, the Real Property Tax Code defines “improvements” as “a valuable its obligation under the Agreement to pay all real estate taxes. It then gave NPC
addition made to property or an amelioration in its condition, amounting to more the full power and authority to represent it in any conference regarding the real
than mere repairs or replacement of waste, costing labor or capital and intended property assessment of the Provincial Assessor.
to enhance its value, beauty or utility or to adapt it for new or further purposes.”
From the aforesaid provisions of law, the Court ruled that although the On September 7, 1995, NPC sought reconsideration of the Provincial Assessor’s
two storage tanks were not embedded in the land, they may, nevertheless, be decision to assess real property taxes on the power barges. The motion was
considered as improvements on the land, enhancing its utility and rendering denied on September 22, 1995, and the Provincial Assessor advised NPC to pay
it useful to the oil industry. The two tanks had been installed with permanence the assessment. This prompted NPC to file a petition with the Local Board of
as receptacles for oil needed by Meralco for its operations. The tanks are Assessment Appeals (LBAA) for the setting aside of the assessment and the
declaration of the barges as non-taxable items.
In its Answer to the petition, the Provincial Assessor averred that the barges were
real property for purposes of taxation under Section 199(c) of Republic Act
(R.A.) No. 7160.
On August 26, 1996, the LBAA rendered a Resolution, ruling that the power
plant facilities, while they may be classified as movable or personal property, are
nevertheless considered real property for taxation purposes because they are
installed at a specific location with a character of permanency.
Meantime, the NPC filed a Motion for Intervention. On September 22, 1998, this
was approved by the CBAA in an Order.
On April 6, 2000, the CBAA rendered a Decision finding the power barges
exempt from real property tax. On July 31, 2001, however, CBAA reversed this
decision. Hence, this petition by FELS.
22. PRESBITERO V. FERNANDEZ
FACTS:
37. In the CA decision being appealed from, judgment was rendered against
Presbitero by the CA, ordering him to reconvey 2 lots to plaintiff Nava.
38. Plaintiff Nava secured a writ of execution and wrote the sheriff to
proceed with the auction sale of the sugar quotas.
39. The sheriff did not present for registration to the Registry of Deeds the
copies of the writ of execution.
40. Defendant Presbitero died. Ricardo Presbitero, as executor of the estate,
sought to set aside the writ of execution and to order the sheriff to desist
from the sale on the ground that the levy on the sugar quotas were void
for non-compliance with the registration requirements prescribed by law
for the levy of immovable property.
41. However, the CA ruled in favor of plaintiff Nava.
42. In this petition, Presbitero seeks the setting aside of the sheriff’s
certificate of sale of the sugar quotas made in favor of Nava.
ISSUE: Whether sugar quotas are immovable or personal property
If they be immovable, then the levy upon them by the sheriff is null and void for
non-compliance with the procedure prescribed by law requiring “the filing with
the Registry of Deeds a copy of the orders together with a description of the
property”
Respondent contends that sugar quotas are movables since they can be
transported from place to place without impairment to the land to which they are
fixed; AND since they are not included in the enumeration in ART 415.
However, under present statute, the quotas shall be deemed as improvements
attaching to the land; and thus, by express provision of law, though not physically
united, the quotas are inseparable therefrom. Similar to ART415(10). Contracts
for public works and servitudes and other real rights over immovable
property.
HELD: By express provision of law, the quotas are deemed as realty
The levy made by the sheriff is void for non-compliance with the registration
requirements prescribed by the Rules of Court.
23. Leon Sibal v. Emiliano Valdez
FACTS:
- There was a previous case, wherein 8 parcels of land belonging originally to
Sibal were levied & attached. Macondray & Co. Inc. bought the 8 parcels &
paid for them separately. Sibal paid Macondray P2,000 for the redemption of
the lands but did not specify to which lots the money should apply.
- Meanwhile, the deputy sheriff of the Province of Tarlac attached and sold to
the defendant Valdez the sugar cane planted by plaintiff Sibal & other tenants
on the same parcels of land sold to Macondray & Co. Within 1 year from the
date of sale, Sibal, in an attempt to exercise his right of redemption, offered to
redeem the said sugar cane and tendered to the defendant Valdez the amount
 sufficient to cover the price paid by the latter for the sugar cane, but Valdez piece of land does not include the fruits and products existing thereon, unless the
refused to accept the money and to return the sugar cane to the plaintiff. contract expressly provides otherwise.
Furthermore, Sibal discovered that Valdez was already attempting to harvest The Supreme Court of Louisiana made the same statements, basically holding
some of the palay on the lands, & had already successfully harvested 300 that, while growing crops, while attached to the land, form part of an immovable,
cavans. they can be owned separately from the land on which they grow, as when the
- Sibal filed this action, alleging that he was the rightful owner of the sugarcane, lessee plants crops on leased land & owns the crops he plants though he does not
which he had a right to redeem as the law considers them as immovable own the land itself. That Court also held that to hold growing crops immovable in
property. all instances would render the pledge of crops impossible. Furthermore, the
- On the other hand, Valdez claims that the sugarcane was in the nature of Supreme Court of California has held that growing crops are personal property
personal property, that he was the owner of the parcels of land & the palay on and subject to execution.
them, & that he never attempted to harvest the palay in the lands that he did
not own. He further filed a counterclaim, asking for damages for the palay and Act No. 1508, the Chattel Mortgage Law, fully recognized that growing crops are
sugar cane he was unable to harvest due to the filing of the claim by Sibal. personal property. Section 2 of said Act provides: "All personal property shall be
- The lower court held that: subject to mortgage, agreeably to the provisions of this Act, and a mortgage
- The sugar can was personal property & was not subject to redemption executed in pursuance thereof shall be termed a chattel mortgage." Section 7 in
- Sibal must pay Valdez the value of the sugar cane & shoots, & the palay that part provides: "If growing crops be mortgaged the mortgage may contain an
Sibal harvested from the lot of Valdez, & damages agreement stipulating that the mortgagor binds himself properly to tend, care for
and protect the crop while growing.
RELATED TO PROPERTY
ISSUE: WON the palay is real property which can be subject to redemption. OTHER THINGS HELD (BRIEFLY)
1. The land is owned by Valdez.
Held: NO. For the purpose of attachment and execution, and for the purposes of 2. The plaintiff did have a share of the palay that was being complained about &
the Chattel Mortgage Law, "ungathered products" have the nature of personal thus his payment of damages to Valdez was deducted.
property. The lower court, therefore, committed no error in holding that the sugar 3. Ultimately, Sibal still lost.
cane in question was personal property and, as such, was not subject to
redemption. 24. Property Law under Justice Hernando
Movable Property
It is contended that sugar cane comes under the classification of real property as
"ungathered products" in par. 2 of art. 334 of the [Old] Civil Code, which states:
Trees, plants, and ungathered products, while they are annexed to the land or FACTS: Philippines long distance telephone company is the holder of a
form an integral part of any immovable property." However, it has been held that legislative franchise to render local and international telecommunication services
under certain conditions, growing crops may be considered as personal property. under Republic Act No. 7082. This means that PLDT holds several contracts
locally and abroad leasing and owning telephone communication wires,
For example, the Supreme Court of Spain had ruled that: (1) pending fruits and networks, and telephone line switches and the like. PLDT alleges that Baynet Co.
ungathered products may be sold and transferred as personal property; (2) in a is a company that illegally uses PLDT’s wires, switches, and network in general
case of ejectment of a lessee of an agricultural land, the lessee is entitled to gather to re-divert calls(which they sell in the form of calling cards in Japan) to make a
the products corresponding to the agricultural year, because said fruits did not go profit, and that this constitutes network fraud and commits ISRs(International
with the land but belonged separately to the lessee; and (3) the mortgage of a Simple Resales) of the products and services they are legally producing. They
charged Baynet Co. with theft and compared their tactics akin to that of jumping
cable wires of electricity. In the 2006 case, the SC ruled that what PLDT provides
is a service, and cannot be considered property, thus not subject to the crime of
theft. A service cannot be stolen. This is a Motion for Reconsideration with
Motion to Refer the Case to the Supreme Court En Banc
ISSUE: WoN the accused are guilty of theft as they stole movable property
HELD: YES. The accused, having used the telephone lines of PLDT without
their consent or knowledge, indeed had stolen more than just a service. In a
telephone call, the human voice is translated into a series of impulses of
electrical energy, which travel along an electrical line, and is once again
translated into sound in order for the other party to have a replication of the
sounds created by the human voice. Telephone calls are in essence,
electricity. Electricity therefore, according to paragraph 3, Article 416 of the
Civil Code, is a movable property as it is a force of nature which was
brought under control by science. Telephone calls also fall under paragraph
1 of the same article as this specific series of electrical signals are capable of
appropriation, and these signals are created, maintained, and delivered by
PLDT’s transmitters, cables, and switches. The accused are guilty of theft
because they stole a movable property owned and produced by PLDT.
25. PNB v. Aznar
FACTS:
The Rural Insurance and Surety Company, Inc. (RISCO) ceased
operation due to business reverses. In order to rehabilitate the company,
they purchased three parcels of land in Talisay and Lahug. The amounts
contributed by plaintiffs constituted as liens an encumbrances on the
aforementioned properties as annotated in the titles of said lots. This
annotation was made pursuant to the Minutes of the Special Meeting of the
Board if Directors of Risco. Thereafter, various subsequent annotations
were made on the same titles, including a Notice of Attachment and Writ
of Execution in favor of herein defendant PNB. Thus a Certificate of Sale
was issued in favor of PNB. This prompted Aznar of RISCO to file an
instant complaint seeking the quieting of their supposed title to the subject
properties, alleging that the subsequent annotations are subject to the prior
annotation of liens and encumbrances. PNB on the other hand countered
that RISCO had no right of action because the issuance of titles to PNB
had already become final and executory and validity cannot be attacked
except in a direct proceeding for their annulment. The RTC ruled in favor
of Aznar, saying that there was an express trust created whereby RISCO is
the trustee and Aznar the beneficiaries.
PNB appealed the adverse ruling to the CA, which set aside the
judgment of the trial court. It said that the monetary contributions by
Aznar was characterized as a loan secured by a lien on the subject lots,
rather than an express trust. Thus it directed PNB to pay Aznar the amount
of their contributions plus legal interest.
ISSUE/HELD:
1. W/N there was an express trust was created?
NO. An express trust cannot be inferred from loose and vague declarations
or from ambiguous circumstances susceptible of other interpretations.
Furthermore, Aznar has no right to ask for the quieting of title of the
properties at issue because they have no legal and/or equitable rights over
the properties that are derived from the previous registered owner which is
RISCO, as RISCO is a separate personality distinct from its stockholders.
(Sorry guys, I have literally no idea what this has to do with property. The
closest thing I can think of is this. Under Art. 417 shares of stock of
agricultural, commercial, and industrial entities is considered movable
property even though they have real estate. So shares that Aznar has in
RISCO are considered movable property, but RISCO itself – the building
where it’s located, any land it owns, etc. – is considered immovable.)
26. LO v KJS ECO- FORMWORK SYSTEM PHIL., INC.
G.R. No. 149420
October 8, 2003
FACTS:
KJS ECO – FORMWORK System Phil., Inc (KJS) is a corporation
engaged in the sale of steel scaffolding while Sonny L. Lo is doing
business under the name and style of San’s Enterprises, a building
contractor. On 1990, Lo ordered scaffolding equipment from KJS worth
540, 425.80. A down payment of 150,000 was paid while the balance shall
be made payable in ten monthly installments. However, Lo was only able
to pay the first two monthly installments due to the financial difficulties
encountered by his business. Thus, despite of the oral and written demands
made by KJS against Lo, he was unable to settle his obligation.
With this, Lo executed a Deed of Assignment wherein he assigned
to KJS his receivable of 335,462.14 from Jomero Realty Corporation
(assignee). However, when KJS tried to collect the said credit to the
assignee, the latter refused to honor the executed Deed on the ground that
Lo was also indebted to it. As a result, KJS wrote Lo demanding for
payment of his obligation, but Lo refused to pay by claiming that his
obligation had been extinguished when he executed the Deed.
Consequently, KJS filed an action for recovery of the sum of money
against Lo.
The RTC of Makati dismissed the complaint on the ground that
the assignment of credit extinguished the obligation. However, it was
reversed by the CA when it ruled that the Deed of Assignment did not
extinguish the obligation of LO on the ground that (1) Lo failed to comply
with his warranty under Deed; (2) the object of the Deed did not exist at
the time of the transaction; and (3) Lo violated the terms of the Deed when
he failed to execute and do all acts and deeds as shall be necessary to
effectually enable KJS to recover the collectibles.
ISSUE: WON assignment of credit is in the nature of sale of
personal property, and has an effect of extinguishing the obligation.
HELD:
YES. An assignment of credit is an agreement by virtue of which
the owner of a credit (assignor), by a legal cause, such as sale, dacion en
pago, exchange or donation, and without consent of the debtor, transfers
his credit and accessory rights to another (assignee), who acquires the
power to enforce it to the same extent as the assignor could enforce it
against the debtor.
Hence, the assignment of credit, which is in the nature of sale
of personal property, produced the effects of a dation in payment
which may extinguish the obligation. However, as in any contract of
sale, the vendor is bound by certain warranties. Lo, as assignor of
credit, is bound to warrant the existence and legality of the credit at
the time of sale or assignment. When Jomero Realty Corporation
claimed that it was no longer indebted to Lo since the latter also had
an unpaid obligation to it, it essentially meant that its obligation to Lo
has been extinguished by compensation. Due to the extinguishment of
debt by compensation, the debt of Lo to Jomero Realty Corporation,
which is the subject of the Deed of Assignment, is deemed inexistent
when the Deed was executed. Consequently, Lo breached the
agreement/ warranty when the assigned credit was inexistent at the
time the Deed was executed; thus, he shall be liable to settle his
indebtedness to KJS.
27. Galvez v. Court of Appeals
G.R. No. L22760
November 29, 1971
Movable property
FACTS:
In 1959, Galvez offered the husband of complainant Camara an exchange
deal for the Camaras’ car. About a week later, Galvez showed the Camaras a
station wagon which they did not like. Galvez then showed them another car at
the Clark Field air base, which they liked. Before consummating the purchase, postponement following the his present his evidence is here assailed as
Camaras asked Galvez for an estimate of the customs duties and other taxes they unreasonable and as amounting to a denial of his right to be heard. The
would have to pay for. Galvez volunteered to settle the tax liabilities by applying Court found that the reasons provided by Galvez failed to persuade. As to
the mere backpay certificates which could be bought for P2000. Following the the claim that the petitioner was deprived of the opportunity to prepare his
purchase, complainant Camara delivered to Galvez a check amounting to defense thru the denial of his motion for postponement, we agree with the
Php2000. Galvez cashed the check from a bank in Ermita. After some delay, respondent Court of Appeals that two years were more than enough time for
Galvez gave Camara the certificate of registration purported to be issued by the this purpose. Estafa is a simple case and two years should have been enough
Motor Vehicles Office (MVO) and set of plate numbers. However, after four to gather evidence. He was given ample time to gather and present such.
months, it was discovered that the car hasn’t been paid. It turned out that the
number appearing in their MVO file did not correspond with the ones in the 28. Carandang vs. Heirs of De Guzman
Bureau of Customs (BOC) files. Camara thus demanded Galvez to return her
money. Galvez, in reply, said that he gave the money to another person. Hence, FACTS:
this petition in which Galvez was indicted for the crime of estafa and is now
appealing to the Supreme Court, having had his previous appeals denied by the [Quirino de Guzman] and [the Spouses Carandang] are stockholders as well as
Pasay City branch of the CFI of Rizal and consequently, the Court of Appeals. corporate officers of Mabuhay Broadcasting System (MBS for brevity), with
equities at fifty four percent (54%) and forty six percent (46%) respectively.
In this petition, he contended the information filed against him does not
allege that it was a check Galvez had received and converted to his own use, Through the years, the capital stock of MBS increased from 500K to 1.5M to 3M
something which he could have done only by negotiating the same through and the spouses Carandang subscribed to the increase. De Guzman claims that
indorsement. The evident subjectmatter of the information, the petitioner part of the payment for these subscriptions were paid by him totaling to 336,
assumes, is the conversion of the P2,000 received by Galvez in cash from the 375php. De Guzman then sent a demand letter for payment of said amount but
bank in Manila. Finally, it is suggested that since the money allegedly convertedthe spouses Carandang] refused to pay the amount, contending that a pre-
by Galvez was actually received by him in cash in the City of Manila, the action incorporation agreement was executed between [Arcadio Carandang] and [de
should have been there commenced. Guzman], whereby the latter promised to pay for the stock subscriptions of the
former without cost, in consideration for [Arcadio Carandang’s] technical
ISSUES: WoN Galvez should be convicted of the crime of estafa, given the expertise, his newly purchased equipment, and his skill in repairing and
alleged information upgrading radio/communication equipment therefore, there is no indebtedness on
WoN Galvez was denied a day in court their part. De guzman filed a complaint and the RTC favored him ordering the
spouses to pay him the 336,375 plus interest and damages. This was upheld by
the CA leading to this petition.
HELD:
YES. The information alleges ‘that Galvez had received the sum of P2,000 from ISSUE:
Camara. The phrase “amount of P2,000.00” is broad enough to refer to either Whether or not respondents were able to prove the loan sought to be
cash or a negotiable instrument. A check, after all, while not regarded as legal collected from petitioner
tender, is normally accepted, under commercial usage, as a substitute for cash.
Further, the credit represented by it in stated monetary value is property HELD: YES.
capable of appropriation.
For the spouses Carandang, the only testimony which touched on the existence
NO. The lower court’s rejection of the petitioner’s motion for a 2-week and substance of the pre-incorporation agreement, is that of petitioner Arcardio
Carandang, which was stricken off the record because he did not submit himself
to a cross-examination of the opposing party.
•
There being no testimony or documentary evidence proving the existence of the
pre-incorporation agreement, the court was constrained to rule that there was no
pre incorporation agreement and that the payment of de guzman of the stock
subscriptions are to be treated as a loan to the spouses carandang which they are
liable to pay.

Property part:

Civil Code, Article 417 provides: "The following are also considered as personal
property: (1) Obligations and actions which have for their object movables and
demandable sums, and (2) Shares of stock of agricultural, commercial and
industrial entities, although they may have real estate."

Credits are personal(movable) properties acquired during the time the loan
or other credit transaction was executed.