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LEUNG YEE V. F.L STRONG MACHINERY CO.

AND WILLIAMSON 37 SCRA 644

FACTS: 1. First mortgage: Compania Agricola Filipina bought rice-cleaning machinery from the machinery company and this was secured by a chattel mortgage on the machinery and the building to which it was installed. Upon failure to pay, the chattel mortgage was foreclosed, the building and machinery sold in public auction and bought by the machinery company. 2. Days after, the Compania Agricola Filipina executed a deed of sale over the land to which the building stood in favor of the machinery company. This was done to cure any defects that may arise in the machinery companys ownership of the building. 3. Second mortgage: on or about the date to which the chattel mortgage was excecuted, Compania executed a real estate mortgage over the building in favor of Leung Yee, distinct and separate from the land. This is to secure payment for its indebtedness for the construction of the building. Upon failure to pay, the mortgage was foreclosed. 4. The machinery company then filed a case, demanding that it be declared the rightful owner of the building. The trial court held that it was the machinery company which was the rightful owner as it had its title before the building was registered prior to the date of registry of Leung Yees certificate.

HELD: The building in which the machinery was installed was real property, and the mere fact that the parties seem to have dealt with it separate and apart from the land on which it stood in no wise changed the character as real property. It follows that neither the original registry in the chattel mortgage registry of the instrument purporting to be a chattel mortgage of the building and the machinery installed therein, nor the annotation in the registry of the sale of the mortgaged property, had any effect whatever so far as the building is concerned. *LANDMARK CASE

BICERRA v TENEZA G.R. No. L-16218 November 29, 1962


Facts: appellants were the owners of the house, worth P200.00, built on and owned by them and situated in the said municipality Lagangilang; that sometime in January 1957 appealed forcibly demolished the house, claiming to be the owners thereof; that the materials of the house, after it was dismantled, were placed in the custody of the barrio lieutenant of the place; and that as a result of appellate's refusal to restore the house or to deliver the material appellants the latter have suffered damages. Issue: whether the action involves title to real property. Ruling/ Rationale: A house is classified as immovable property by reason of its adherence to the soil on which it is built (Art. 415, par. 1, Civil Code). This classification holds true regardless of the fact that the house may be situated on land belonging to a different owner. But once the house is demolished, as in this case, it ceases to exist as such and hence its character as an immovable likewise ceases.

PUNSALAN, JR. V. VDA. DE LACSAMANA121 SCRA 331


FACTS: Punsalan was the owner of a piece of land, which he mortgaged in favor of PNB. Due to his failure to pay, the mortgage was foreclosed and the land was sold in a public auction to which PNB was the highest bidder. On a relevant date, while Punsalan was still the possessor of the land, it secured a permit for the construction of a warehouse. Fop A deed of sale was executed between PNB and Punsalan. This contract was amended to include the warehouse and the improvement thereon. By virtue of these instruments, respondent Lacsamana secured title over the property in her name. Petitioner then sought for the annulment of the deed of sale. Among hisallegations was that the bank did not own the building and thus, it should not be included in the said deed. Petitioners complaint was dismissed for improper venue. The trial cour theld that the action being filed in actuality by petitioner is a real action involving his right over a real property. HELD: Warehouse claimed to be owned by petitioner is an immovable or real property. Buildings are always immovable under the Code. A building treated separately from the land on which it is stood is immovable property and the mere fact that the parties to a contract seem to have dealt with it separate and apart from the land on which it stood in no wise changed its character as immovable property.

7 PRUDENTIAL BANK V. PANIS153 SCRA 390


FACTS: Spouses Magcale secured a loan from Prudential Bank. To secure payment, they executed a real estate mortgage over a residential building. The mortgage included also the right to occupy the lot and the information about the sales patent applied for by the spouses for the lot to which the building stood. After securing the first loan, the spouses secured another from the same bank. To secure payment, another real estate mortgage was executed over the same properties. The Secretary of Agriculture then issued a Miscellaneous Sales Patent over the land which was later on mortgaged to the bank. The spouses then failed to pay for the loan and the REM was extrajudicially foreclosed and sold in public auction despite opposition from the spouses. The respondent court held that the REM was null and void. HELD:A real estate mortgage can be constituted on the building erected on the land belonging to another. The inclusion of building distinct and separate from the land in the CivilCode can only mean that the building itself is an immovable property. While it is true that a mortgage of land necessarily includes in the absence of stipulation of the improvements thereon, buildings, still a building in itself may be mortgaged by itself apart from the land on which it is built. Such a mortgage would still be considered as a REM for the building would still be considered as immovable property even if dealt with separately and apart from the land. The original mortgage on the building and right to occupancy of the land was executed before the issuance of the sales patent and before the government was divested of title to the land. Under the foregoing, it is evident that the mortgage executed by private respondent on his own building was a valid mortgage. As to the second mortgage, it was done after the sales patent was issued and thus prohibits pertinent provisions of the Public Land Act.

TUMALAD V. VICENCIO41 SCRA 143


FACTS: Vicencio and Simeon executed a chattel mortgage in favor of plaintiffs Tumalad over their house, which was being rented by Madrigal and Company. This was executed to guarantee a loan, payable in one year with a 12% per annum interest. The mortgage was extra judicially foreclosed upon failure to pay the loan. The house was sold at a public auction and the plaintiffs were the highest bidder. A corresponding certificate of sale was issued. Thereafter, the plaintiffs filed an action for ejectment against the defendants, praying that the latter vacate the house as they were the proper owners. HELD: Certain deviations have been allowed from the general doctrine that buildings are immovable property such as when through stipulation, parties may agree to treat as personal property those by their nature would be real property. This is partly based on the principle of estoppel wherein the principle is predicated on statements by the owner declaring his house as chattel, a conduct that may conceivably stop him from subsequently claiming otherwise. In the case at bar, though there be no specific statement referring to the subject house as personal property, yet by ceding, selling or transferring a property through chattel mortgage could only have meant that defendant conveys the house as chattel, or at least, intended to treat the same as such, so that they should not now be allowed to make an inconsistentst and by claiming otherwise.

MAKATI LEASING AND FINANCE CORPORATION V.WEAREVER TEXTILE MILLS122 SCRA 296
FACTS: To be able to secure financial accommodations from the petitioner, the private respondent discounted and assigned several receivables under a Receivable Purchase Agreement. To secure the collection of there ceivables, a chattel mortgage was executed over machinery found in the factory of the private respondent. As the private respondent failed to pay, the mortgage was extrajudicially foreclosed. Nonetheless, the sheriff was unable to seize the machinery. This prompted petitioner to file an action for replevin. The CA reversed the decision of the trial court and ordered the return of the drive motor, after ruling that the machinery may not be the subject of a chattel mortgage, given that it was an immovable under the provisions of Article 415. The same was attached to the ground by means of bolts andthe only way to remove it from the plant would be to drill the ground. HELD: There is no logical justification to exclude the rule out that the machinery may be considered as personal property, and subject to a chattel mortgage. If a house may be considered as personal property for purposes of executing a chattel mortgage, what more a machinery, which is movable by nature and becomes immobilized only by destination or purpose, may not be likewise treated as such

MANARANG AND MANARANG V. OFILADA AND ESTEBAN99 SCRA 108


FACTS: Manarang secured a loan from Esteban guaranteed by a chattel mortgage over a house of mixed materials. Due to failure to pay, the chattel mortgage was foreclosed. Before the sale of the property, Manarang tried to pay for the property but the sheriff refused to accept tender unless there is payment for the publication of the notice of sale in the newspapers. This prompted Manarang to bring this suit to compel the sheriff to accept payment. He averred that the publication was unnecessary as the house should be considered as personal property per agreement in the chattel mortgage, and the publication for notice of sale is unnecessary. HELD:There is no question that a building of mixed materials may be a subject of chattel mortgage, in which case it is considered as between the parties as personal property. The mere fact that a house was the subject of chattel mortgage and was considered as personal property by the parties doesnt make the said house personal property for purposes of the notice to be given for its sale in public auction. It is real property within the purview of Rule 39, Section16 of the Rules of Court as it has become a permanent fixture on the land, which is real property.

NAVARRO V. PINEDA9 SCRA 631


FACTS: Pineda and his mother executed real estate and chattel mortgages in favor of Navarro, to secure a loan they got from the latter. The REM covered a parcel of land owned by the mother while the chattel mortgage covered a residential house. Due to the failure to pay the loan, they asked for extensions to pay for the loan. On the second extension, Pineda executed a PROMISE wherein in case of default in payment, he wouldnt ask for any additional extension and there would be no need for any formal demand. In spite of this, they still failed to pay. Navarro then filed for the foreclosure of the mortgages. The court decided in his favor. HELD: 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. Furthermore, although in some instances, a house of mixed materials has been considered as a chattel between the parties and that the validity of the contract between them, has been recognized, it has been a constant criterion that with respect to third persons, who are not parties to the contract, and specially in execution proceedings, the house is considered as immovable property.

DAVAO SAW MILL CO. VS. CASTILLO61 SCRA 709


FACTS: Petitioner is the holder of a lumber concession. It operated a sawmill on a land, which it doesnt own. Part of the lease agreement was a stipulation in which after the lease agreement, all buildings and improvements would pass to the ownership of the lessor, which would not include machineries and accessories. In connection to this, petitioner had in its sawmill machineries and other equipment wherein some were bolted in foundations of cement. HELD: The machinery must be classified as personal property. The lessee placed the machinery in the building erected on land belonging to another, with the understanding that the machinery was not included in the improvements which would pass to the lessor on

the expiration of the lease agreement. The lessee also treated the machinery as personal property in executing chattel mortgages in favor of third persons. The machinery was levied upon by the sheriff as personalty pursuant to a writ of execution obtained without any protest being registered. Furthermore, machinery only becomes immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a tenant,usufructuary, or any person having temporary right, unless such person acted as the agent of the owner.

TSAI V. COURT OF APPEALS336 SCRA 324


FACTS: EVERTEX secured a loan from PBC, guaranteed by a real estate and chattel mortgage over a parcel of land where the factory stands, and the chattels located therein, as included in a schedule attached to the mortgage contract. Another loan was obtained secured by a chattel mortgage over properties with similar descriptions listed in the first schedule. During the date of execution of the second mortgage, EVERTEX purchased machineries and equipment. Due to business reverses, EVERTEX filed for insolvency proceedings. It failed to pay its obligation and thus, PBC initiated extrajudicial foreclosure of the mortgages. PBC was the highest bidder in the public auctions, making it the owner of the properties. It then leased the factory premises to Tsai. Afterwards, EVERTEX sought the annulment of the sale and conveyance of the properties to PBC as it was allegedly a violation of the INSOLVENCY LAW. The RTC held that the lease and sale were irregular as it involved properties not included in the schedule of the mortgage contract. HELD: While it is true that the controverted properties appear to be immobile, a perusal of the contract of REM and CM executed by the parties gives a contrary indication. In the case at bar, both the trial and appellate courts show that the intention was to treat the machineries as movables or personal property. Assuming that the properties were considered immovables, nothing detracts the parties from treating it as chattels to secure an obligation under the principle of estoppel.

MINDANAO BUS COMPANY V. CITY ASSESSOR ANDTREASURER 6 SCRA 197


FACTS: Petitioner is engaged in a public utility business, solely engaged in transporting passengers and cargoes by motor trucks, over its authorized lines in Mindanao. It owns a main office and branch offices. To be found in their offices are machineries and equipment, which were assessed by the City Assessor as real properties. HELD: Movable equipments to be immobilized in contemplation of law must first be essential and principal elements of an industry or works without which such industry or works would be unable to function or carry on the industrial purpose for which it was established. We may here distinguish those movables, which are essential and principal elements of an industry, from those which may not be so considered immobilized by destination because they are merely incidental, not essential and principal. In the case at bar, the tools and equipments in question are by their nature not essential and principal elements of petitioners business of transporting passengers and cargoes by motor trucks. They are merely incidentals.

BOARD OF ASSESSMENT APPEALS V. MANILA ELECTRICCOMPANY10 SCRA 68


FACTS: City Assessor of QC declared the steel towers for real property tax under Tax Declarations. After denying the respondents petition to cancel these declarations, an appeal was taken with the CTA which held that the steel towers come under the exception of poles under the franchise given to MERALCO; the steel towers are personal properties; and the City Treasurer is liable for the refund of the amount paid. HELD: The steel towers of an electric company dont constitute real property forthe purposes of real property tax.

MANILA ELECTRIC CO. V. CENTRAL BOARD OF ASSESSMENTAPPEALS114 SCRA 273


FACTS: Petitioner owns two oil storage tanks, made of steel plates wielded and assembled on the spot. Their bottoms rest on a foundation consisted of compacted earth, sand pad as immediate layer, and asphalt stratum as to player. The tanks merely sit on its foundation. The municipal treasurer of Batangas made an assessment for realty tax on the two tanks, based on the report of the Board of Assessors. MERALCO wished to oppose this assessment as they averred that the tanks are not real properties. HELD:

While the two storage tanks are not embodied in the land, they may nevertheless be considered as improvements in the land, enhancing its utility and rendering it useful to the oil industry. For purposes of taxation, the term real property may include things, which should generally be considered as personal property. it is familiar phenomenon to see things classified as real property for purposes of taxation which on general principle may be considered as personal property.

PIANSAY V. DAVID12 SCRA 227


FACTS: David secured a loan from Vda. De Uy Kim, and to secure the payment, he executed a chattel mortgage over a house in favor of Kim. Due to failure to pay, the CM was foreclosed and Kim was the highest bidder in the public auction. Kim then sold the house to Mangubat. The latter then filed charges against David for the collection of loan and praying that the deed of sale issued by Kim in favor of Piansay be declared null and void. The trial court held David liable to Mangubat but dismissed the complaint with regard Kim and Piansay. Kim and Piansay then filed charges against David and Mangubat. Due to the civil case, David demanded from Piansay the payment of rentals for the use of the house, which the latter claims to be his property. HELD: Regardless of the validity of a contract constituting a chattel mortgage on a house, as between the parties to the said contract, the same cannot and doesnt bind third persons who arent parties to the aforementioned contract or their privies. As a consequence, the sale of the house in question in the proceedings for the sale of the house in question in the proceedings for the extrajudicial foreclosure of said chattel mortgage, is null and void insofar as Mangubat is concerned and didnt confer upon Kim as buyer in said sale, any dominical right in and to said house.

SIBAL V. VALDEZ50 PHIL 512


FACTS: The Deputy Sheriff, through a writ of execution, attached the personal properties of Sibal, including the sugar cane in question in the 7 parcels of land described in a complaint. The personal properties were then sold in public auction, including the sugar canes. Included also in those attached were real properties wherein 8 out of the 11 parcels of land, house and camarin were bought by Valdez through the public auction. He also bought the sugar cane in question. HELD: Generally, sugar cane comes under the classification of ungathered products under real properties in the CC. However, under certain conditions, it may be considered as personal property. For purposes of attachment and execution, as well as for the purposes of the Chattel Mortgage Law, ungathered products have the nature of personal property

PHIL. REFINING CO. V. JARQUE61 PHIL 229


FACTS: Philippine Refining and Jarque has entered into mortgages over two motor vessels. These have been denominated as chattel mortgages. The fourth mortgage was instituted 30 days before insolvency proceedings to which Jarque prayed that he be declared as an insolvent debtor, which soon was granted and all his rights to his properties were assigned to Corominas. The trial court declined to order the foreclosure of the mortgages. HELD: Vessels are considered as personal property under the civil laws. Similarly, under common law, they are considered as personal property but at some circumstances are considered as peculiar kind of personal property. Since the term personal property includes vessels, it may be the subject to the provisions of the Chattel Mortgage Law.

US V. CARLOS21 PHIL 553


FACTS: Accused was charged with larceny or the unlawful use of electric current. He was found guilty. HELD: It is true that electricity is no longer considered as fluid but its manifestations and effects are like those of gas, may be seen and felt. The true test on whether of what is a proper subject of larceny seems to be not whether the subject is corporeal or not but whether it is capable of appropriation by another than the owner. Electricity, is a valuable article of merchandise, bought and sold like other personal property and is capable of appropriation by another.

J. MORELAND, DISSENTING: An electric current is not a tangible thing, a chattel, but is a condition or state on which a thing or chattel finds itself; and that a condition or state cannot be stolen independently of the thing or chattel of which it is acondition or state. That it is chattels, which are subjects of larceny and not conditions. (Electricity is only energy)

Evangelista v. Alto Surety


Facts: In 1949, Santos Evangelista instituted Civil Case No. 8235 of the CFI Manila (Santos Evangelista vs. Ricardo Rivera) for a sum of money. On the same date, he obtained a writ of attachment, which was levied upon a house, built by Rivera on a land situated in Manila and leased to him, by filing copy of said writ and the corresponding notice of attachment with the Office of the Register of Deeds of Manila. In due course, judgment was rendered in favor of Evangelista, who bought the house at public auction held in compliance with the writ of execution issued in said case on 8 October 1951. The corresponding definite deed of sale was issued to him on 22 October 1952, upon expiration of the period of redemption. When Evangelista sought to take possession of the house, Rivera refused to surrender it, upon the ground that he had leased the property from the Alto Surety & Insurance Co., Inc. and that the latter is now the true owner of said property. It appears that on 10 May 1952, a definite deed of sale of the same house had been issued to Alto Surety, as the highest bidder at an auction sale held, on 29 September 1950, in compliance with a writ of execution issued in Civil Case 6268 of the same court (Alto Surety & Insurance vs. Maximo Quiambao, Rosario Guevara and Ricardo Rivera)" in which judgment for the sum of money, had been rendered in favor of Alto Surety. Hence, on 13 June 1953, Evangelista instituted an action against Alto Surety and Ricardo Rivera, for the purpose of establishing his title over said house, and securing possession thereof, apart from recovering damages. After due trial, the CFI Manila rendered judgment for Evangelista, sentencing Rivera and Alto Surety to deliver the house in question to Evangelista and to pay him, jointly and severally, P40.00 a month from October 1952, until said delivery. The decision was however reversed by the Court of Appeals, which absolved Alto Surety from the complaint on account that although the writ of attachment in favor of Evangelista had been filed with the Register of Deeds of Manila prior to the sale in favor of Alto Surety, Evangelista did not acquire thereby a preferential lien, the attachment having been levied as if the house in question were immovable property. Issue: Whether or not a house constructed by the lessee of the land on which it is built, should be dealt with, for purpose of attachment, as immovable property? Held: The court ruled that the house is not personal property, much less a debt, credit or other personal property not capable of manual delivery, but immovable property. As held in Laddera vs. Hodges (48 OG 5374), "a true building is immovable or real property, whether it is erected by the owner of the land or by a usufructuary or lessee. The opinion that the house of Rivera should have been attached, as "personal property capable of manual delivery, by taking and safely keeping in his custody", for it declared that "Evangelista could not have validly purchased Ricardo Rivera's house from the sheriff as the latter was not in possession thereof at the time he sold it at a public auction is untenable. Parties to a deed of chattel mortgage may agree to consider a house as personal 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 estoppel. Neither this principle, nor said view, is applicable to strangers to said contract. The rules on execution do not allow, and should not be interpreted as to allow, the special consideration that parties to a contract may have desired to impart to real estate as personal property, when they are not ordinarily so. Sales on execution affect the public and third persons. The regulation governing sales on execution are for public officials to follow. The form of proceedings prescribed for each kind of property is suited to its character, not to the character which the parties have given to it or desire to give it. The regulations were never intended to suit the consideration that parties, may have privately given to the property levied upon. The court therefore affirms the decision of the CA with cost against Alto Surety.

ASSOCIATED INSURANCE AND SURETY COMPANY V. IYA, ET. AL 103 SCRA 972 G.R. Nos. L-10837-38 May 30, 1958

FACTS: Spouses Valino were the owners of a house, payable on installments from Philippine Realty Corporation. To be able to purchase on credit rice from NARIC, they filed a surety bond subscribed by petitioner and therefor, they executed an alleged chattel mortgage on the house in favor of the surety company. The spouses didnt own yet the land on which the house was constructed on at the time of the undertaking. After being able to purchase the land, to be able to secure payment for indebtedness, the spouses executed a real estate mortgage in favor of Iya. The spouses were not able to satisfy obligation with NARIC, petitioner was compelled to pay. The spouses werent able to pay the surety company despite demands and thus, the company foreclosed the chattel mortgage. It later learned of the real estate mortgage over the house and lot secured by the spouses. This prompted the company to file an action against the spouses. Also, Iya filed another civil action against the spouses, asserting that she has a better right over the property. The trial court heard the two cases jointly and it held that the surety company had a preferred right over the building as since when the chattel mortgage was secured, the land wasnt owned yet by the spouses making the building then a chattel and not a real property.

PEOPLE'S BANK AND TRUST CO. vs. DAHICAN LUMBER COMPANY G.R. No. L-17500 May 16, 1967
Facts: On September 8, 1948, Atlantic Gulf & Pacific Company of Manila, a West Virginia corporation licensed to do business in the Philippines sold and assigned all its rights in the Dahican Lumber concession to Dahican Lumber Company - hereinafter referred to as DALCO - for the total sum of $500,000.00, of which only the amount of $50,000.00 was paid. Thereafter, to develop the concession, DALCO obtained various loans from the People's Bank & Trust Company amounting, as of July 13, 1950, to P200,000.00. In addition, DALCO obtained, through the BANK, a loan of $250,000.00 from the Export-Import Bank of Washington D.C., evidenced by five promissory notes of $50,000.00 each, maturing on different dates, executed by both DALCO and the Dahican America Lumber Corporation, a foreign corporation and a stockholder of DALCO, As security for the payment of the abovementioned loans, on July 13, 1950 DALCO executed in favor of the BANK a deed of mortgage covering five parcels of land situated in the province of Camarines Norte together with all the buildings and other improvements existing thereon and all the personal properties of the mortgagor located in its place of business in the municipalities of Mambulao and Capalonga, Camarines Norte. On the same date, DALCO executed a second mortgage on the same properties in favor of ATLANTIC to secure payment of the unpaid balance of the sale price of the lumber concession amounting to the sum of $450,000.00. Both deeds contained a provision extending the mortgage lien to properties to be subsequently acquired by the mortgagor. Both mortgages were registered in the Office of the Register of Deeds of Camarines Norte. In addition thereto DALCO and DAMCO pledged to the BANK 7,296 shares of stock of DALCO and 9,286 shares of DAMCO to secure the same obligation.

Upon DALCO's and DAMCO's failure to pay the fifth promissory note upon its maturity, the BANK paid the same to the ExportImport Bank of Washington D.C., and the latter assigned to the former its credit and the first mortgage securing it. Subsequently, the BANK gave DALCO and DAMCO up to April 1, 1953 to pay the overdue promissory note.c

After July 13, 1950 - the date of execution of the mortgages mentioned above - DALCO purchased various machineries, equipment, spare parts and supplies in addition to, or in replacement of some of those already owned and used by it on the date aforesaid. Pursuant to the provision of the mortgage deeds quoted theretofore regarding "after acquired properties," the BANK requested DALCO to submit complete lists of said properties but the latter failed to do so. In connection with these purchases, there appeared in the books of DALCO as due to Connell Bros. Company (Philippines) - a domestic corporation who was acting as the general purchasing agent of DALCO -the sum of P452,860.55 and to DAMCO, the sum of P2,151,678.34.chan

On December 16, 1952, the Board of Directors of DALCO, in a special meeting called for the purpose, passed a resolution agreeing to rescind the alleged sales of equipment, spare parts and supplies by CONNELL and DAMCO to it. On January 13, 1953, the BANK, in its own behalf and that of ATLANTIC, demanded that said agreements be cancelled but CONNELL and DAMCO refused to do so. As a result, on February 12, 1953; ATLANTIC and the BANK, commenced foreclosure proceedings in the Court of First Instance of Camarines Norte against DALCO and DAMCO. Upon motion of the parties the Court, on September 30, 1953, issued an order transferring the venue of the action to the Court of First Instance of Manila. On August 30, 1958, upon motion of all the parties, the Court ordered the sale of all the machineries, equipment and supplies of DALCO, and the same were subsequently sold for a total consideration of P175,000.00 which was deposited in court pending final determination of the action. By a similar agreement one-half (P87,500.00) of this amount was considered as representing the proceeds obtained from the sale of the "undebated properties" (those not claimed by DAMCO and CONNELL), and the other half as representing those obtained from the sale of the "after acquired properties".

ISSUE: WON the "after acquired properties" were subject to the deeds of mortgage mentioned heretofore. Assuming that they are subject thereto, WON the mortgages are valid and binding on the properties aforesaid inspite of the fact that they were not registered in accordance with the provisions of the Chattel Mortgage Law. HELD: Under the fourth paragraph of both deeds of mortgage, it is crystal clear that all property of every nature and description taken in exchange or replacement, as well as all buildings, machineries, fixtures, tools, equipments, and other property that the mortgagor may acquire, construct, install, attach; or use in, to upon, or in connection with the premises - that is, its lumber concession - "shall immediately be and become subject to the lien" of both mortgages in the same manner and to the same extent as if already included therein at the time of their execution. Such stipulation is neither unlawful nor immoral, its obvious purpose being to maintain, to the extent allowed by circumstances, the original value of the properties given as security. Article 415 does not define real property but enumerates what are considered as such, among them being machinery, receptacles, instruments or replacements intended by owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and shall tend directly to meet the needs of the said industry or works. On the strength of the above-quoted legal provisions, the lower court held that inasmuch as "the chattels were placed in the real properties mortgaged to plaintiffs, they came within the operation of Art. 415, paragraph 5 and Art. 2127 of the New Civil Code". In the present case, the characterization of the "after acquired properties" as real property was made not only by one but by both interested parties. There is, therefore, more reason to hold that such consensus impresses upon the properties the character determined by the parties who must now be held in estoppel to question it.

Standard Oil Co. of New York vs Jaramillo


44 Phil 630 Date FACTS: Gervasia dela Rosa executed a document in the form of a Chattel Mortgage purporting to convey to Standard Oil Co. by way of mortgage both the leasehold interest of the land she leases in Manila and the building which stands thereon. The clauses in said document describe the property as personal including the right, title and interest of the mortgagor in and to the contract of lease and also the building of the said premises therein. After said document had been duly acknowledge and delivered, the petitioner presented it to Joaquin Jaramillo, as register of deeds of the City of Manila, for the purpose of having the same recorded. The respondent opined that it was not a chattel mortgage for the interests mortgaged did not appear to be personal property within the meaning of the Chattel Mortgage Law and registration was refused on this ground only.

ISSUE: 1. Whether or not said property could be a subject for mortgage. 2. Whether the respondent is clothe with authority to determine such. . RULING: The duties of a register of deeds in respect to the registration of chattel mortgages are of purely ministerial character and no provision of law can be cited which confers upon him any judicial or quasi-judicial power to determine the nature of any document of which registration is sought as a chattel mortgage. The efficacy of the act of recording a chattel mortgage consists in the fact that it operates as constructive notice of the existence of the contract, and the legal effects of the contract must be discovered in the instrument itself in relation with the fact of notice. Registration adds nothing to the instrument, considered as a source of title, and affects nobodys rights except as a species of notice. The parties to a contract may by agreement treat as personal property that which by nature would be real property and it is a familiar phenomenon to see things classed as real property for purposes of taxation which on general principle might be considered personal property. It is unnecessary to determine whether or not the property described in the document is real or personal. The issue is to be determined by the Court and not by the register of deeds.

Berkenkotter v. Cu Unjieng
Facts: On 26 April 1926, the Mabalacat Sugar Company obtained from Cu Unjieng e Hijos, a loan secured by a first mortgage constituted on 2 parcels of land "with all its buildings, improvements, sugar-canemill, steel railway, telephone line, apparatus, utensils and whatever forms part or is a necessary complement of said sugar -cane mill, steel railway, telephone line, now existing or that may in the future exist in said lots. On 5 October 1926, the Mabalacat Sugar Company decided to increase the capacity of its sugar central by buying additional machinery and equipment, so that instead of milling 150 tons daily, it could produce 250. Green proposed to the Berkenkotter, to advance the necessary amount for the purchase of said machinery and equipment, promising to reimburse him as soon as he could obtain an additional loan from the mortgagees, Cu Unjieng e Hijos, and that in case Green should fail to obtain an additional loan from Cu Unjieng e Hijos, said machinery and equipment would become security therefore, said Green binding himself not to mortgage nor encumber them to anybody until Berkenkotter be fully reimbursed for the corporation's indebtedness to him. Having agreed to said proposition made in a letter dated 5 October

1926, Berkenkotter, on 9 October 1926, delivered the sum of P1,710 to Green, the total amount supplied by him to Green having beenP25,750. Furthermore, Berkenkotter had a credit of P22,000 against said corporation for unpaid salary. With the loan of P25,750 and said credit of P22,000, the Mabalacat Sugar Co., Inc., purchased the additional machinery and equipment.On 10 June 1927, Green applied to Cu Unjieng e Hijos for an additional loan of P75,000 offering as security the additional machinery and equipment acquired by said Green and installed in the sugar central after the execution of the original mortgage deed, on 27 April 1927, together with whatever a d d i t i o n a l e q u i p m e n t a c q u i r e d w i t h s a i d l o a n . G r e e n f a i l e d t o o b t a i n s a i d l o a n . H e n c e , a b o v e mentioned mortgage was in effect. Issue: Are the additional machines also considered mortgaged? Held: Article 1877 of the Civil Code provides that mortgage includes all natural accessions, improvements, g r o w i n g f r u i t s , a n d r e n t s n o t c o l l e c t e d w h e n t h e o b l i g a t i o n f a l l s d u e , a n d t h e a m o u n t o f a n y indemnities paid or due the owner by the insurers of the mortgaged property or by virtue of the exercise of the power of eminent domain, with the declarations, amplifications, and limitations established by law, whether the state continues in the possession of the person who mortgaged it or w h e t h e r i t p a s s e s i n t o t h e h a n d s o f a t h i r d p e r s o n . It is a rule, that in a mortgage of real estate, the improvements on the same are included; therefore, all objects permanently attached to a mortgaged building or land, although they may have been placed there after the mortgage was constituted, are also included. Article 334, paragraph 5, of the Civil Code gives the character of real property to machinery, liquid containers, instruments or implements intende d by the owner of any building or land for use in connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade or industry. The installation of a machinery and equipment in a mortgaged sugar central, in lieu of another of less capacity, for the purpose of carrying out the industrial functions of the latter and increasing production, constitutes a permanent improvement on said sugar central and subjects said machinery and equipment to the mortgage constituted thereon

BURGOS, SR. V. CHIEF OF STAFF, AFP [133 SCRA 800; G.R. NO. 64261; 26 DEC 1984]
Tuesday, February 03, 2009 Posted by Coffeeholic Writes

Facts: Petitioners assail the validity of 2 search warrants issued on December 7, 1982 by respondent Judge Cruz-Pano of the then Court of First Instance of Rizal, under which the premises known as No. 19, Road 3, Project 6, Quezon City, and 784 Units C & D, RMS Building, Quezon Avenue, Quezon City, business addresses of the "Metropolitan Mail" and "We Forum" newspapers, respectively, were searched, and office and printing machines, equipment, paraphernalia, motor vehicles and other articles used in the printing, publication and distribution of the said newspapers, as well as numerous papers, documents, books and other written literature alleged to be in the possession and control of petitioner Jose Burgos, Jr. publisher-editor of the "We Forum" newspaper, were seized. As a consequence of the search and seizure, these premises were padlocked and sealed, with the further result that the printing and publication of said newspapers were discontinued. Respondents contend that petitioners should have filed a motion to quash said warrants in the court that issued them before impugning the validity of the same before this Court. Respondents also assail the petition on ground of laches (Failure or negligence for an unreasonable and unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier. It is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it). Respondents further state that since petitioner had already used as evidence some of the documents seized in a prior criminal case, he is stopped from challenging the validity of the search warrants. Petitioners submit the following reasons to nullify the questioned warrants: 1. Respondent Judge failed to conduct an examination under oath or affirmation of the applicant and his witnesses, as mandated by the above-quoted constitutional provision as well as Sec. 4, Rule 126 of

the

Rules

of

Court.

2. The search warrants pinpointed only one address which would be the former abovementioned address. 3. Articles belonging to his co-petitioners were also seized although the warrants were only directed against Jose Burgos, Jr. 4. Real properties were seized.

5. The application along with a joint affidavit, upon which the warrants were issued, from the Metrocom Intelligence and Security Group could not have provided sufficient basis for the finding of a probable cause upon which a warrant may be validly issued in accordance with Section 3, Article IV of the 1973 Constitution. Respondents justify the continued sealing of the printing machines on the ground that they have been sequestered under Section 8 of Presidential Decree No. 885, as amended, which authorizes sequestration of the property of any person engaged in subversive activities against the government in accordance with implementing rules and regulations as may be issued by the Secretary of National Defense.

Issue:

Whether

or

Not

the

search

warrants

were

validly

issued

and

executed.

Held: In regard to the quashal of warrants that petitioners should have initially filed to the lower court, this Court takes cognizance of this petition in view of the seriousness and urgency of the constitutional Issue raised, not to mention the public interest generated by the search of the "We Forum" offices which was televised in Channel 7 and widely publicized in all metropolitan dailies. The existence of this special circumstance justifies this Court to exercise its inherent power to suspend its rules. With the contention pertaining to laches, the petitioners gave an explanation evidencing that they have exhausted other extra-judicial efforts to remedy the situation, negating the presumption that they have abandoned their right to the possession of the seized property. On the enumerated reasons: 1. This objection may properly be considered moot and academic, as petitioners themselves conceded during the hearing on August 9, 1983, that an examination had indeed been conducted by respondent judge of Col. Abadilla and his witnesses. 2. The defect pointed out is obviously a typographical error. Precisely, 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. 3. Section 2, Rule 126, of the Rules of Court, 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. 4. 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.

5. The broad statements in the application and joint affidavit are mere conclusions of law and does not satisfy the requirements of probable cause. Deficient of such particulars as would justify a finding of the existence of probable cause, said allegation cannot serve as basis for the issuance of a search warrant and it was a grave error for respondent judge to have done so. In Alvarez v. Court of First Instance, this Court ruled that "the oath required must refer to the truth of the facts within the personal knowledge of the petitioner or his witnesses, because the purpose thereof is to convince the committing magistrate, not the individual making the affidavit and seeking the issuance of the warrant, of the existence of probable cause." Another factor which makes the search warrants under consideration constitutionally objectionable is that they are in the nature of general warrants. The description of the articles sought to be seized under the search warrants in question are too general. With regard to the respondents invoking PD 885, there is an absence of any implementing rules and regulations promulgated by the Minister of National Defense. Furthermore, President Marcos himself denies the request of military authorities to sequester the property seized from petitioners. The closure of the premises subjected to search and seizure is contrary to the freedom of the press as guaranteed in our fundamental law. The search warrants are declared null and void.

GSIS V. CA 170 SCRA 533

FACTS: Two deeds of mortgages were issued by spouses Racho in favor of GSIS as security for two loans obtained by them. They also executed a promissory note. Due to the failure to comply with the terms of the mortgage, the mortgages were extrajudicially foreclosed. The foreclosure was being assailed by the spouses as they alleged that the mortgage contracts were signed not as guarantees or sureties but merely gave their common property for the sole benefit of the other spouses. Both sides of the case used the provisions on accommodation parties in the Negotiable Instruments Law. The trial court dismissed the action but this was reversed by the appellate court.

HELD: Both parties rely on the Negotiable Instruments Law but this is misplaced. The promissory note and the deeds of mortgage are not negotiable instruments as they lack the fourth requisite which is it must be payable to order or bearer. EN BANC G.R. No. L-17898 October 31, 1962

PASTOR D. AGO, Petitioner, vs. THE HON. COURT OF APPEALS, HON. MONTANO A. ORTIZ, Judge of the Court of First Instance of Agusan, THE PROVINCIAL SHERIFF OF SURIGAO and GRACE PARK ENGINEERING, INC., Respondents. LABRABOR, J.: chanrobles virtual law library

Appeal by certiorari to review the decision of respondent Court of Appeals in CA-G.R. No. 26723-R entitled "Pastor D. Ago vs. The Provincial Sheriff of Surigao, et al." which in part reads: In this case for certiorari and prohibition with preliminary injunction, it appears from the records that the respondent Judge of the Court of First Instance of Agusan rendered judgment (Annex "A") in open court on January 28, 1959, basing said judgment on a compromise agreement between the parties.chanroblesvirtualawlibrary chanrobles virtual law library On August 15, 1959, upon petition, the Court of First Instance issued a writ of execution.chanroblesvirtualawlibrary chanrobles virtual law library Petitioner's motion for reconsideration dated October 12, 1959 alleges that he, or his counsel, did not receive a formal and valid notice of said decision, which motion for reconsideration was denied by the court below in the order of November 14, 1959.chanroblesvirtualawlibrary chanrobles virtual law library Petitioner now contends that the respondent Judge exceeded in his jurisdiction in rendering the execution without valid and formal notice of the decision.chanroblesvirtualawlibrary chanrobles virtual law library A compromise agreement is binding between the parties and becomes the law between them. (Gonzales vs. Gonzales G.R. No. L1254, May 21, 1948, 81 Phil. 38; Martin vs. Martin, G.R. No. L-12439, May 22, 1959) .chanroblesvirtualawlibrary chanrobles virtual law library It is a general rule in this jurisdiction that a judgment based on a compromise agreement is not appealable and is immediately executory, unless a motion is filed on the ground fraud, mistake or duress. (De los Reyes vs. Ugarte, 75 Phil. 505; Lapena vs. Morfe, G.R. No. L-10089, July 31, 1957) chanrobles virtual law library Petitioner's claim that he was not notified or served notice of the decision is untenable. The judgment on the compromise agreement rendered by the court below dated January 28, 1959, was given in open court. This alone is a substantial compliance as to notice. (De los Reyes vs. Ugarte, supra) chanrobles virtual law library IN VIEW THEREOF, we believe that the lower court did not exceed nor abuse its jurisdiction in ordering the execution of the judgment. The petition for certiorari is hereby dismissed and the writ of preliminary injunction heretofore dissolved, with costs against the petitioner.chanroblesvirtualawlibrary chanrobles virtual law library IT IS The facts of the case may be briefly stated as follows: In 1957, petitioner Pastor D. Ago bought sawmill machineries and equipments from respondent Grace Park Engineer domineering, Inc., executing a chattel mortgage over said machineries and equipments to secure the payment of balance of the price remaining unpaid of P32,000.00, which petitioner agreed to pay on installment basis.chanroblesvirtualawlibrary chanrobles virtual law library Petitioner Ago defaulted in his payment and so, in 1958 respondent Grace Park Engineering, Inc. instituted extra-judicial foreclosure proceedings of the mortgage. To enjoin said foreclosure, petitioner herein instituted Special Civil Case No. 53 in the Court of First Instance of Agusan. The parties to the case arrived at a compromise agreement and submitted the same in court in writing, signed by Pastor D. Ago and the Grace Park Engineering, Inc. The Hon. Montano A. Ortiz, Judge of the Court of First Instance of Agusan, then presiding, dictated a decision in open court on January 28, 1959.chanroblesvirtualawlibrary chanrobles virtual law library Petitioner continued to default in his payments as provided in the judgment by compromise, so Grace Park Engineering, Inc. filed with the lower court a motion for execution, which was granted by the court on August 15, 1959. A writ of execution, dated September 23, 1959, later followed.chanroblesvirtualawlibrary chanrobles virtual law library The herein respondent, Provincial Sheriff of Surigao, acting upon the writ of execution issued by the lower court, levied upon and ordered the sale of the sawmill machineries and equipments in question. These machineries and equipments had been taken to and installed in a sawmill building located in Lianga, Surigao del Sur, and owned by the Golden Pacific Sawmill, Inc., to whom, petitioner alleges, he had sold them on February 16, 1959 (a date after the decision of the lower court but before levy by the Sheriff).chanroblesvirtualawlibrary chanrobles virtual law library

Having been advised by the sheriff that the public auction sale was set for December 4, 1959, petitioner, on December 1, 1959, filed the petition for certiorari and prohibition with preliminary injunction with respondent Court of Appeals, alleging that a copy of the aforementioned judgment given in open court on January 28, 1959 was served upon counsel for petitioner only on September 25, 1959 (writ of execution is dated September 23, 1959); that the order and writ of execution having been issued by the lower court before counsel for petitioner received a copy of the judgment, its resultant last order that the "sheriff may now proceed with the sale of the properties levied constituted a grave abuse of discretion and was in excess of its jurisdiction; and that the respondent Provincial Sheriff of Surigao was acting illegally upon the allegedly void writ of execution by levying the same upon the sawmill machineries and equipments which have become real properties of the Golden Pacific sawmill, Inc., and is about to proceed in selling the same without prior publication of the notice of sale thereof in some newspaper of general circulation as required by the Rules of Court.chanroblesvirtualawlibrary chanrobles virtual law library The Court of Appeals, on December 8, 1959, issued a writ of preliminary injunction against the sheriff but it turned out that the latter had already sold at public auction the machineries in question, on December 4, 1959, as scheduled. The respondent Grace Park Engineering, Inc. was the only bidder for P15,000.00, although the certificate sale was not yet executed. The Court of Appeals constructed the sheriff to suspend the issuance of a certificate of sale of the said sawmill machineries and equipment sold by him on December 4, 1959 until the final decision of the case. On November 9, 1960 the Court of Appeals rendered the aforequoted decision.chanroblesvirtualawlibrary chanrobles virtual law library Before this Court, petitioner alleges that the Court of Appeals erred (1) in holding that the rendition of judgment on compromise in open court on January 1959 was a sufficient notice; and (2) in not resolving the other issues raised before it, namely, (a) the legality of the public auction sale made by the sheriff, and (b) the nature of the machineries in question, whether they are movables or immovables.chanroblesvirtualawlibrary chanrobles virtual law library The Court of Appeals held that as a judgment was entered by the court below in open court upon the submission of the compromise agreement, the parties may be considered as having been notified of said judgment and this fact constitutes due notice of said judgment. This raises the following legal question: Is the order dictated in open court of the judgment of the court, and is the fact the petitioner herein was present in open court was the judgment was dictated, sufficient notice thereof? The provisions of the Rules of Court decree otherwise. Section 1 of Rule 35 describes the manner in which judgment shall be rendered, thus: SECTION 1. How judgment rendered. - All judgments determining the merits of cases shall be in writing personally and directly prepared by the judge, and signed by him, stating clearly and distinctly the facts and the law on which it is based, filed with the clerk of the court. The court of first instance being a court of record, in order that a judgment may be considered as rendered, must not only be in writing, signed by the judge, but it must also be filed with the clerk of court. The mere pronouncement of the judgment in open court with the stenographer taking note thereof does not, therefore, constitute a rendition of the judgment. It is the filing of the signed decision with the clerk of court that constitutes rendition. While it is to be presumed that the judgment that was dictated in open court will be the judgment of the court, the court may still modify said order as the same is being put into writing. And even if the order or judgment has already been put into writing and signed, while it has not yet been delivered to the clerk for filing it is still subject to amendment or change by the judge. It is only when the judgment signed by the judge is actually filed with the clerk of court that it becomes a valid and binding judgment. Prior thereto, it could still be subject to amendment and change and may not, therefore, constitute the real judgment of the court.chanroblesvirtualawlibrary chanrobles virtual law library Regarding the notice of judgment, the mere fact that a party heard the judge dictating the judgment in open court, is not a valid notice of said judgment. If rendition thereof is constituted by the filing with the clerk of court of a signed copy (of the judgment), it is evident that the fact that a party or an attorney heard the order or judgment being dictated in court cannot be considered as notice of the real judgment. No judgment can be notified to the parties unless it has previously been rendered. The notice, therefore, that a party has of a judgment that was being dictated is of no effect because at the time no judgment has as yet been signed by the judge and filed with the clerk.chanroblesvirtualawlibrary chanrobles virtual law library Besides, the Rules expressly require that final orders or judgments be served personally or by registered mail. Section 7 of Rule 27 provides as follows: SEC. 7. Service of final orders or judgments. - Final orders or judgments shall be served either personally or by registered mail. In accordance with this provision, a party is not considered as having been served with the judgment merely because he heard the judgment dictating the said judgment in open court; it is necessary that he be served with a copy of the signed judgment that has

been filed with the clerk in order that he may legally be considered as having been served with the judgment.chanroblesvirtualawlibrary chanrobles virtual law library For all the foregoing, the fact that the petitioner herein heard the trial judge dictating the judgment in open court, is not sufficient to constitute the service of judgement as required by the above-quoted section 7 of Rule 2 the signed judgment not having been served upon the petitioner, said judgment could not be effective upon him (petitioner) who had not received it. It follows as a consequence that the issuance of the writ of execution null and void, having been issued before petitioner her was served, personally or by registered mail, a copy of the decision.chanroblesvirtualawlibrary chanrobles virtual law library The second question raised in this appeal, which has been passed upon by the Court of Appeals, concerns the validity of the proceedings of the sheriff in selling the sawmill machineries and equipments at public auction with a notice of the sale having been previously published.chanroblesvirtualawlibrary chanrobles virtual law library The record shows that after petitioner herein Pastor D. Ago had purchased the sawmill machineries and equipments he assigned the same to the Golden Pacific Sawmill, Inc. in payment of his subscription to the shares of stock of said corporation. Thereafter the sawmill machinery and equipments were installed in a building and permanently attached to the ground. By reason of such installment in a building, the said sawmill machineries and equipment became real estate properties in accordance with the provision of Art. 415 (5) of the Civil Code, thus: ART. 415. The following are immovable property: xxx xxx xxx chanrobles virtual law library

(5) Machinery, receptacles, instruments or implements tended 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; This Court in interpreting a similar question raised before it in the case of Berkenkotter vs. Cu Unjieng e Hijos, 61 Phil. 683, held that the installation of the machine and equipment in the central of the Mabalacat Sugar Co., Inc. for use in connection with the industry carried by the company, converted the said machinery and equipment into real estate by reason of their purpose. Paraphrasing language of said decision we hold that by the installment of the sawmill machineries in the building of the Gold Pacific Sawmill, Inc., for use in the sawing of logs carried on in said building, the same became a necessary and permanent part of the building or real estate on which the same was constructed, converting the said machineries and equipments into real estate within the meaning of Article 415(5) above-quoted of the Civil Code of the Philippines.chanroblesvirtualawlibrary chanrobles virtual law library Considering that the machineries and equipments in question valued at more than P15,000.00 appear to have been sold without the necessary advertisement of sale by publication in a newspaper, as required in Sec. 16 of Rule 39 of the Rules of Court, which is as follows: SEC. 16. Notice of sale of property on execution. - Before the sale of property on execution, notice thereof must be given as follows: xxx xxx xxx chanrobles virtual law library

(c) In case of real property, by posting a similar notice particularly describing the property for twenty days in three public places in the municipality or city where the property is situated, and also where the property is to be sold, and, if the assessed value of the property exceeds four hundred pesos, by publishing a copy of the notice once a week, for the same period, in some newspaper published or having general circulation in the province, if there be one. If there are newspapers published in the province in both the English and Spanish languages, then a like publication for a like period shall be made in one newspaper published in the English language, and in one published in the Spanish language. the sale made by the sheriff must be declared null and void.chanroblesvirtualawlibrary chanrobles virtual law library WHEREFORE, the decision of the Court of Appeals sought to be reviewed is hereby set aside and We declare that the issuance of the writ of execution in this case against the sawmill machineries and equipments purchased by petitioner Pastor D. Ago from the Grace Park Engineering, Inc., as well as the sale of the same by the Sheriff of Surigao, are null and void. Costs shall be against the respondent Grace Park Engineering, Inc.chanroblesvirtualawlibrary chanrobles virtual law library