Bicerra v.

Teneza
[G.R. No. L-16218. November 29, 1962.]

FACTS: The Bicerras are supposedly the owners of the house worth P200, built on a lot owned by
them in Lagangilang, Abra; which the Tenezas forcibly demolished in January 1957, claiming to be the
owners thereof. The materials of the house were placed in the custody of the barrio lieutenant. The
Bicerras filed a complaint claiming actual damages of P200, moral and consequential damages
amounting to P600, and the costs. The CFI Abra dismissed the complaint claiming that the action was
within the exclusive (original) jurisdiction of the Justice of the Peace Court of Lagangilang, Abra.

ISSUE:
W/N the action involves title to real property.
W/N the dismissal of the complaint was proper.
HELD: The Supreme Court affirmed the order appealed. Having been admitted in forma pauperis, no
costs were adjudged.1. House is immovable property even if situated on land belonging to a different
owner; Exception, when demolished, a house is classified as immovable property by reason of its
adherence to the soil on which it is built (Article 415, paragraph 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.2. Recovery of damages not exceeding P2,000 and involving no real
property belong to the Justice of the Peace Court The complaint is for recovery of damages, the only
positive relief prayed for. Further, a declaration of being the owners of the dismantled house and/or of
the materials in no wise constitutes the relief itself which if granted by final judgment could be
enforceable by execution, but is only incidental to the real cause of action to recover damages. As this
is a case for recovery of damages where the demand does not exceed PhP 2,000 and that there is no
real property litigated as the house has ceased to exist, the case is within the jurisdiction of the Justice
of the Peace Court.

PRUDENTIAL BANK V. PANIS

153 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 Civil Code 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.

Makati Leasing and Finance Corp., vs Wearever Textile Mills, Inc.,

122 SCRA 296

FACTS
Wearever Textile Mills, Inc. executed a chattel mortgage contract in favor of Makati Leasing and
Finance Corporation covering certain raw materials and machinery. Upon default, Makati Leasing fi led
a petition for judicial foreclosure of the properties mortgaged. Acting on Makati Leasings application
for replevin, the lower court issued a writ of seizure. Pursuant thereto, the sheriff enforcing the seizure
order seized the machinery subject matter of the mortgage. In a petition for certiorari and prohibition,
the Court of Appeals ordered the return of the machinery on the ground that the same can-not be the
subject of replevin because it is a real property pursuant to Article415 of the new Civil Code, the same
being attached to the ground by means of bolts and the only way to remove it from Wearever textiles
plant would be to drill out or destroy the concrete fl oor. When the motion for reconsideration of Makati
Leasing was denied by the Court of Appeals, Makati Leasing elevated the matter to the Supreme Court.
ISSUE
Whether the machinery in suit is real or personal property from the point of view of the parties.
HELD
There is no logical justification to exclude the rule out the present case from the application of the
pronouncement in Tumalad v Vicencio, 41 SCRA 143. If a house of strong materials, like what was
involved in the Tumalad case, may be considered as personal property for purposes of executing
a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party
will be prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its
nature and becomesimmobilized only by destination or purpose, may not be likewise treated as such.
This is really because one who has so agreed is estopped from the denying the existence of the
chattel mortgage.
In rejecting petitioners assertion on the applicability of the Tumalad doctrine, the CA lays stress on the
fact that the house involved therein was built on a land that did not belong to the owner of such house.
But the law makes no distinction with respect to the ownership of the land on which the house
is built and We should not lay down distinctions not contemplated by law.
It must be pointed out that the characterization by the private respondent is indicative of the
intention and impresses upon the property the character determined by the parties. As stated
in Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract
may, by agreement, treat as personal property that which by nature would be a real property as long
as no interest of third parties would be prejudiced thereby.
The status of the subject matter as movable or immovable property was not raised as an issue before
the lower court and the CA, except in a supplemental memorandum in support of the petition filed in
the appellate court. There is no record showing that the mortgage has been annulled, or that steps
were taken to nullify the same. On the other hand, respondent has benefited from the said contract.
Equity dictates that one should not benefit at the expense of another.
As such, private respondent could no longer be allowed to impugn the efficacy of the chattel mortgage
after it has benefited therefrom.
Therefore, the questioned machinery should be considered as personal property.

Evangelista v. Alto Surety

Facts:
In 1949, Santos Evangelista instituted Civil Case No. 8235 of the CFI Manila 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 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 "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.

Davao Sawmill Co. vs Castillo

A tenant placed machines for use in a sawmill on the landlord's land.
FACTS
Davao Sawmill Co., operated a sawmill. The land upon which the business was conducted was leased
from another person. On the land, Davao Sawmill erected a building which housed the machinery it
used. Some of the machines were mounted and placed on foundations of cement. In the contract of
lease, Davo Sawmill agreed to turn over free of charge all improvements and buildings erected by it on
the premises with the exception of machineries, which shall remain with the Davao Sawmill. In an action
brought by the Davao Light and Power Co., judgment was rendered against Davao Sawmill. A writ of
execution was issued and the machineries placed on the sawmill were levied upon as personalty by
the sheriff. Davao Light and Power Co., proceeded to purchase the machinery and other properties
auctioned by the sheriff.
ISSUE
Are the machineries real or personal property?
HELD
Art.415 of the New Civil Code provides that Real Property consists of:
(1) Lands, buildings, roads and constructions of all kinds adhered to the soil;
xxx
(5) Machinery, receptacles, instruments or implements intended by the owner pf the tenement for
an industry ot works which may be carried on in a building or on a piece of land, and which tend
directly to meet the needs of the said industry or works;
Appellant should have registered its protest before or at the time of the sale of the property. While not
conclusive, the appellant's characterization of the property as chattels is indicative of intention and
impresses upon the property the character determined by the parties.
Machinery is naturally movable. However, machinery may be immobilized by destination or
purpose under the following conditions:
General Rule: The machinery only becomes immobilized if placed in a plant by the owner of the
property or plant.
Immobilization cannot be made by a tenant, a usufructuary, or any person having only
a temporary right.
Exception: The tenant, usufructuary, or temporary possessor acted as agent of the owner of the
premises; or he intended to permanently give away the property in favor of the owner.
As a rule, therefore, the machinery should be considered as Personal Property, since it was not placed
on the land by the owner of the said land.

Board of Assessment Appeals v. Manila Electric Company

GR No. L-15334, January 31, 1964
- Steel towers are not real property but personal property
Facts:
On October 20, 1902, Act No 484 was enacted authorizing the Municipal Board of Manila to grant a
franchise to construct, maintain and operate an electric street railway and electric light, heat and power
system in Manila and its suburbs to the person making the most favorable bid. Respondent MERALCO
later on became the transferee and owner of the franchise. The electric power of MERALCO is
generated by its power plant in Laguna and transmitted to the City of Manila via wires which are
attached on steel towers constructed by respondent. These wires passed through Quezon City. On
November 15, 1955, petitioner City Assessor of Quezon City declared these steel towers for real
property tax. Respondents petition to cancel the declaration was denied.
On appeal to the Board of Assessment Appeals of Quezon City, respondent was made to pay Php
11,651.86 as real property tax on the steel towers for the years 1952-1956. Respondent paid under
protest and filed a petition for review in the Court of Tax Appeals which rendered a decision ordering
the cancellation of the tax declarations and City Treasurer of Quezon City to refund to respondent the
sum of Php 11, 651.86. A motion for reconsideration was subsequently denied and the instant petition
for review was filed on April 22, 1959.
Issue:
Whether the steel towers are exempt from real property tax being personal and not real property.
Ruling:
Yes. Even if the steel towers in question are not within the purview of the definition of poles as found
in the grantees franchise, the steel towers are still not real property and this would warrant their
exemption for the real property tax.
The definition of real property is not provided by the tax law, but by Article 415 of the Civil Code which
states the following as immovable (real) property:
(1) Land, buildings, roads and constructions of all kinds adhered to the soil;
xxx
(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated
therefrom without breaking the material or deterioration of the object;
xxx
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land, and which tend directly
to meet the needs of the said industry or works;
The steel towers do not come within any of the objects mentioned in the above paragraphs of Article
415 of the Civil Code. They are not adhered to the soil for they could easily be unscrewed and moved
from place. They can also be separated from the land without breaking the material or causing the
deterioration of the object to which they are fixed. They are also not machineries, instruments or
receptacles and even if they were, they were not placed there for the industries or work done on the
land.

Serg's v. PCI Leasing

Sergs Products, Inc. vs. PCI Leasing G.R. No. 137705. August 22, 2000
FACTS: PCI Leasing and Finance filed a complaint for sum of money, with an application for a writ of
replevin. 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. The sheriff
proceeded to petitioner's factory, seized one machinery, with word that he would return for other
machineries. Petitioner (Sergs Products) filed a motion for special protective order to defer
enforcement of the writ of replevin. PCI Leasing opposed the motion on the ground that the properties
were still personal and therefore can still be subjected to seizure and writ of replevin. Petitioner
asserted that properties sought to be seized were immovable as defined in Article 415 of the Civil
Code. Sheriff was still able to take possession of two more machineries
In its decision on the original action for certiorari filed by the Petitioner, the appellate court, Citing the
Agreement of the parties, held that the subject machines were personal property, and that they had
only been leased, not owned, by petitioners; and ruled that the "words of the contract are clear and
leave
no
doubt
upon
the
true
intention
of
the
contracting
parties."
ISSUE: Whether or not the machineries became real property by virtue of immobilization.
Ruling:
Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ
issued
by
the
RTC,
because
they
were
in
fact
real
property.
Writ of Replevin: Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery
of
personal
property
only.
Article 415 (5) of the Civil Code provides 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.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.
However, contracting parties may validly stipulate that a real property be considered as personal. 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.
Section 12.1 of the Agreement between the parties provides The PROPERTY is, and shall at all times
be and remain, personal property notwithstanding that the PROPERTY or any part thereof may now
be, or hereafter become, in any manner affixed or attached to or embedded in, or permanently resting
upon, real property or any building thereon, or attached in any manner to what is permanent.
The machines are personal property and they are proper subjects of the Writ of Replevin

ROSALES VS. CASTELLFORT

G.R. NO.157044. OCTOBER 5, 2005
FACTS: Spouses-petitioners Rodolfo V. Rosales and Lily Rosqueta-Rosales (petitioners) are the
registered owners of a parcel of land with an area of approximately 315 square meters, covered by
Transfer Certificate of Title (TCT) No. 36856[4] and designated as Lot 17, Block 1 of Subdivision Plan
LRCPsd-55244 situated in Los Baos, Laguna. On August 16, 1995, petitioners discovered
that a house was being constructed on their lot,without their knowledge and consent, by respondent
Miguel Castelltort (Castelltort).It turned out that respondents Castelltort and his wife Judith had
purchased a lot, Lot 16 of the same Subdivision Plan, from respondent Lina LopezVillegas (Lina) through her son-attorney-in-fact ReneVillegas (Villegas) but that after a survey thereof
by geodetic engineer Augusto Rivera, he pointed to Lot17 as the Lot 16 the Castelltorts purchased.
Negotiations for the settlement of the case thus began, with Villegas offering a larger lot near petitioners
lot in the same subdivision as a replacement thereof.
In the alternative, Villegas proposed to pay the purchase price of petitioners lot with legal interest. Both
proposals were, however, rejected by petitioners whose counsel, by letter of August 24, 1995, directed
Castelltort to stop the construction of and demolish his house and any other structure he may have built
thereon, and desist from entering the lot. Petitioners subsequently filed on September 1, 1995 a
complaint for recovery of possession and damages with prayer for the issuance of a restraining
order and preliminary injunction against spouses-respondents Miguel and Judith Castelltort before the
RTC of Calamba, Laguna, docketed as Civil Case No.2229-95-C.
ISSUE: Under Art 448, who has the right of option?
HELD: Under the foregoing provision (Art 448), the landowner can choose between appropriating the
building by paying the proper indemnity or obliging the builder to pay the price of the land, unless its
value is considerably more than that of the structures, in which case the builder in good faith shall pay
reasonable rent. [34] If the parties cannot come to terms over the conditions of the lease, the court
must fix the terms thereof. The choice belongs to the owner of the land, a rule that accords with the
principle of accession, i.e., that the accessory follows the principal and not the other way around. Even
as the option lies with the landowner, the grant to him, nevertheless, is preclusive. The landowner
cannot refuse to exercise either option and compel instead the owner of the building to remove it from
the land. The raison detre for this provision has been enunciated thus: Where the builder, planter or
sower has acted in good faith, a conflict of rights arises between the owners, and it becomes
necessary to protect the owner of the improvements without causing injustice to
the owner of the land. In view of the impracticability of creating a state of forced co-ownership, the law
has
provided
a
just
solution
by
giving
the
owner
of
the
land
the
option to acquire the improvements after payment of the proper indemnity, or to oblige the builder or
planter to pay for the land and the sower the proper rent. He cannot refuse to exercise either option. It
is the owner of the land who is authorized to exercise the option, because his right is older, and
because, by the principle of accession, he is entitled to the ownership of the accessory thing.

Kilario v. CA
G.R. No. 134329. January 19, 2000
Respondent Silverio Pada filed an ejectment case against sps. Kilario. The latter
occupies a portion of the intestate estate of Jacinto Pada, Grandfather of Silverio. The
Kilarios have been living therein since 1960 by sheer tolerance. When Jacinto Pada
dies, his heirs entered into extrajudicial partition of his estate in 1951. As a result
thereof, lot 5581 was allocated to Ananias and Marciano who became co-owners of said
lot.
Ananias died and his daughter succeeded in his right as co-owner. Eventually,
Juanita sold her right in the co-ownership to Engr. Paderes. Mariaon the other hand,
heir of Marciano, sold her share to her cousin respondent Silverio Pada. The latter
demanded sps. Kilario to vacate but the sps. refused. On June 1995, a complaint for
ejectment was filed against sps. Kilario. On July1995 a deed of donation in their favor
was executed by heirs of Amador Pada.
ISSUE: Whether or not the partition was valid
The extrajudicial partition of the estate of Jacinto Pada among his heirs made in
1951 is valid, albeit executed in an unregistered private document. No law requires
partition among heirs to be in writing and be registered in order to be valid. The object of registration is
to serve as constructive notice to others. It follows then that the intrinsic validity of partition not executed
with the prescribed formalities is not undermined when no creditors are involved. Without creditors to
take into consideration, it is competent for the heirs of an estate to enter into an agreement for
distribution thereof in a manner and upon a plan different from those provided by the rules from which,
in the first place, nothing can be inferred that a writing or other formality is essential for the partition to
be valid. The partition of inherited property need not be embodied in a public document so as to be
effective as regards the heirs that participated therein. The extrajudicial partition which the heirs of
Jacinto Pada executed voluntarily and spontaneously in 1951 has produced a legal status. When they
discussed and agreed on the division of the estate of Jacinto Pada, it is presumed that they did so in
furtherance of their mutual interests. As such, their division is conclusive, unless and until it is shown
that there were debts existing against the estate which had not been paid. No showing, however, has
been made of any unpaid charges against the estate of Jacinto Pada. Thus, there is no reason why the
heirs should not be bound by their voluntary acts.
The belated act of Concordia, Esperanza and Angelito, who are the heirs of
Amador Pada, of donating the subject property to petitioners after forty four (44) years
of never having disputed the validity of the 1951 extrajudicial partition that allocated the subject property
to Marciano and Ananias, produced no legal effect. The donation made by his heirs to petitioners of
the subject property, thus, is void for they were not the owners thereof. At any rate it is too late in the
day
for
the
heirs
of
Amador
Pada
to
repudiate the legal effects of the 1951 extrajudicial partition as prescription and laches have equally set
in. Petitioners are estopped from impugning the extrajudicial partition executed by the heirs of Jacinto
Pada after explicitly admitting in their Answer that they had been occupying the subject property since
1960 without ever paying any rental as they only relied on the liberality and tolerance of the Pada family.
Their admissions are evidence of a high order and bind them insofar as the character of their
possession of the subject property is concerned.

TUMALAD V. VICENCIO
Although a building is an immovable; the parties to a contract may by agreement treat as
personal property that which by nature is a real property however they are estopped from
subsequently claiming otherwise.

FACTS:
Alberta Vicencio and Emiliano Simeon received a loan of P4, 800 from Gavino and Generosa Tumalad.
To guaranty said loan, Vicencio executed a chattel mortgage in favor of Tumalad over their house of
strong materials which stood on a land which was rented from the Madrigal & Company, Inc. When
Vicencio defaulted in paying, the house was extrajudicially foreclosed, pursuant to their contract. It was
sold to Tumalad and they instituted a Civil case in the Municipal Court of Manila to have Vicencio vacate
the house and pay rent.
The MTC decided in favor of Tumalad ordering Vicencio to vacate the house and pay rent until they
have completely vacated the house. Vicencio is questioning the legality of the chattel mortgage on the
ground that 1) the signature on it was obtained thru fraud and 2) the mortgage is a house of strong
materials which is an immovable therefore can only be the subject of a REM. On appeal, the CFI found
in favor of Tumalad, and since the Vicencio failed to deposit the rent ordered, it issued a writ of
execution, however the house was already demolished pursuant to an order of the court in an ejectment
suit against Vicencio for non-payment of rentals. Thus the case at bar.

ISSUE:
Whether or not the chattel mortgage is void since its subject is an immovable

HELD:
NO.
Although a building is by itself an immovable property, parties to a contract may treat as personal
property that which by nature would be real property and it would be valid and good only insofar as the
contracting parties are concerned. By principle of estoppel, the owner declaring his house to be a
chattel may no longer subsequently claim otherwise.
When Vicencio executed the Chattel Mortgage, it specifically provides that the mortgagor cedes, sells
and transfers by way of Chattel mortgage. They intended to treat it as chattel therefore are now
estopped from claiming otherwise. Also the house stood on rented land which was held in previous
jurisprudence to be personalty since it was placed on the land by one who had only temporary right
over the property thus it does not become immobilized by attachment.
[Vicencio though was not made to pay rent since the action was instituted during the period of
redemption therefore Vicencio still had a right to remain in possession of the property]

Ladera v. Hodges
G.R. No. 8027-R, September 23, 1952, Vol. 48, No. 12, Official Gazette 5374
Reyes, J.B.L., J.
FACTS: Paz G. Ladera entered into a contract with C.N. Hodges. Hodges promised to sell a lot with
an area of 278 square meters to Ladera, subject to certain terms and conditions. The agreement called
for a down payment of P 800.00 and monthly installments of P 5.00 each with interest of 1% per month,
until P 2,085 is paid in full. In case of failure of the purchaser to make any monthly payment within 60
days after it fell due, the contract may be considered as rescinded or annulled. Ladera built a house on
the lot. Later on, she defaulted in the payment of the agreed monthly installment. Hodges filed an action
for the ejectment of Ladera.
The court issued an alias writ of execution and pursuant thereto, the city sheriff levied upon all rights,
interests, and participation over the house of Ladera. At the auction sale, Laderas house was sold to
Avelino A. Magno. Manuel P. Villa, later on, purchased the house from Magno. Ladera filed an action
against Hodges and the judgment sale purchasers. Judgment was rendered in favor of Ladera, setting
aside the sale for non-compliance with Rule 39, Rules of Court regarding judicial sales of real property.
On appeal, Hodges contends that the house, being built on a lot owned by another, should be regarded
as movable or personal property.
ISSUE: Whether or not Laderas house is an immovable property.
HELD: YES. The old Civil Code numerates among the things declared by it as immovable property the
following: lands, buildings, roads and constructions of all kind adhered to the soil. The law does not
make any distinction whether or not the owner of the lot is the one who built. Also, since the principles
of accession regard buildings and constructions as mere accessories to the land on which it is built, it
is logical that said accessories should partake the nature of the principal thing.

Mindanao Bus Company v. The City Assessor and Treasurer

G.R. No. L-17870, September 29, 1962, 6 SCRA 197
Labrador, J.
FACTS: Petitioner Mindanao Bus Company is a public utility solely engaged in transporting passengers
and cargoes by motor trucks, over its authorized lines in the Island of Mindanao, collecting rates
approved by the Public Service Commission. Respondent sought to assess the following real properties
of the petitioner; (a) Hobart Electric Welder Machine, (b) Storm Boring Machine; (c) Lathe machine with
motor; (d) Black and Decker Grinder; (e) PEMCO Hydraulic Press; (f) Battery charger (Tungar 1 charge
machine) and (g) D-Engine Waukesha-M-Fuel. It was alleged that these machineries are sitting on
cement or wooden platforms, and 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. Respondent City Assessor of Cagayan de Oro City
assessed at P4, 400 petitioner's above-mentioned equipment. Petitioner appealed the assessment to
the respondent Board of Tax Appeals on the ground that the same are not realty.
Respondents contend that said equipments, though movable, are immobilized by destination, in
accordance with paragraph 5 of Article 415 of the New Civil Code.
ISSUE: Whether the equipments in question are immovable or movable properties.
HELD: The equipments in question are movable. So that movable equipments to be immobilized in
contemplation of the law, it 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."
Thus, the Court distinguished those movable which become immobilized by destination because they
are essential and principal elements in the industry from those which may not be so considered
immobilized because they are merely incidental, not essential and principal. The tools and equipments
in question in this instant case are, by their nature, not essential and principle municipal elements of
petitioner's business of transporting passengers and cargoes by motor trucks. They are merely
incidentalsacquired as movables and used only for expediency to facilitate and/or improve its service.
Even without such tools and equipments, its business may be carried on, as petitioner has carried on,
without such equipments, before the war. The transportation business could be carried on without the
repair or service shop if its rolling equipment is repaired or serviced in another shop belonging to
another.

Sulo sa Nayon v. Nayon Pilipinong Foundation

GR No. 170923, January 20, 2009
Puno, C.J.
Lease
Facts:
Respondent Nayong Pilipino Foundation is a GOCC and an owner of a parcel of land in Pasay City
known as the Nayong Pilipino Complex. On June 1, 1975, respondent leased a portion of the Nayong
Pilipino Complex to petitioner Sulo sa Nayon, Inc. for the construction and operation of a hotel building,
to be known as the Philippine Village Hotel for an initial period of 21 years or until May 1996. The lease
is renewable for a period of 25 years under the same terms and condition.
Thus, on March 7, 1995, petitioners sent respondent a letter notifying the latter of their intention to
renew the contract for another 25 years to which both parties were amenable and subsequently
renewed the contract for another 25 years or until 2012. Beginning January 2001, petitioners defaulted
in the payment of their monthly rental.
Respondent repeatedly demanded petitioners to pay the arrears and vacate the premises. The last
demand letter was sent on March 26, 2001.On September 5, 2001, respondent filed a complaint for
unlawful detainer before the MeTC of Pasay City. MeTC ruled in favor of respondent citing Art. 1657 of
the CC stating that for nonpayment of rentals, the lessor (herein respondent) may rescind the sale and
recover the back rentals and possession of the premises. MeTC also ruled that improves made by a
lessee on the leased premises are not valid reasons for their retention thereof. Petitioners appealed to
the RTC which modified the ruling of the MeTC which held that Art. 448 is applicable considering the
elements of permanency of the construction and substantial value of the improvements as well as the
undisputed ownership over the land improvements. The respondent than has an obligation to either
appropriate the building or compel petitioners to purchase the land for the reason that petitioner is a
builder in good faith.
On appeal before the CA, the same reversed the decision of the RTC ruling that Art. 448 is not
applicable to the case at bar.
Issues:
(1) Whether the MeTC acquired jurisdiction over the ejectment case.
(2) Whether the rules on accession, as found in Art.448 and 546 of the Civil Code, apply to the instant
case.
Ruling:
(1) Yes, MeTC did acquire jurisdiction over the case. Petitioners argue that the MeTC did not acquire
jurisdiction to hear and decide the ejectment case because they never received any demand from
respondent to pay rentals and vacate the premises, since such demand is a jurisdictional requisite. But
contrary to the claim of petitioners, documentary evidence proved that a demand letter dated March
26, 2001 was sent by respondent through registered mail to petitioners, requesting them to pay the
rental arrears or else it will be constrained to file the appropriate legal action and possess the leased
premises. Further, petitioners argument that the demand letter is "inadequate" because it contained
no demand to vacate the leased premises does not persuade. But the word "vacate" is not a talismanic
word that must be employed in all notices. It is enough that it is clear that the demand letter is intended
as a notice to petitioners to pay the rental arrears, and a notice to vacate the premises in case of failure
of petitioners to perform their obligation to pay. Both requisites are present in the demand sent by
respondent. (2) No, Art.448 and 546 of the Civil Code is not applicable in the case at bar.

It is settled that the said provisions are applicable only to cases where one believes himself to have a
claim of title over the land, and not to those who only have an interest of a holder of the land, such as
a tenant. In the case at bar, petitioners have no adverse claim or title to the land. In fact, as lessees,
they recognize that the respondent is the owner of the land.
The introduction of valuable improvements on the leased premises does not give the petitioners the
right of retention and reimbursement which rightfully belongs to a builder in good faith. Otherwise, such
a situation would allow the lessee to easily "improve" the lessor out of its property. A lessee is neither
a builder in good faith nor in bad faith that would call for the application of Articles 448 and 546 of the
Civil Code. His rights are governed by Article 1678 of the Civil Code. Under Article 1678, the lessor has
the option of paying one-half of the value of the improvements which the lessee made in good faith,
which are suitable for the use for which the lease is intended, and which have not altered the form and
substance of the land. On the other hand, the lessee may remove the improvements should the lessor
refuse to reimburse.
Petitioners argue that to apply Article 1678 to their case would result to sheer injustice, as it would
amount to giving away the hotel and its other structures at virtually bargain prices. Thus, they contend
that it is the lease contract that governs the relationship of the parties, and consequently, the parties
may be considered to have impliedly waived the application of Article 1678.
The court did not sustain their argument for it is basic doctrine that laws are deemed incorporated in
each and every contract. Existing laws always form part of any contract. Further, the lease contract in
the case at bar shows no special kind of agreement between the parties as to how to proceed in cases
of default or breachof the contract.