IMMOVABLE AND MOVABLE PROPERTY (ART.
and Plaza theatre be held liable solidarily for
415-418)
JRPA
Lopez v. Orosa
G.R. Nos. L-10817-18, 103 SCRA 98
DOCTRINE:For while it is true that generally,
real estate connotes the land and the building
constructed thereon, it is obvious that the
inclusion of the building in the enumeration of
what may constitute real properties could only
mean one thing—that a building is by itself an
immovable property
FACTS:
Lopez was engaged in business under the
name Lopez-Castelo Sawmill. Orosa, who lived
in the same province as Lopez, one day
approached Lopez and invited the latter to
make an investment in the theatre business.
Orosa, his family and close friends apparently
were forming a corporation named Plaza
Theatre. Lopez expressed his unwillingness to
invest. Nonetheless, there was an oral
agreement between Lopez and Orosa that
Lopez would be supplying the lumber for the
construction of the theatre. The terms were the
following: one, Orosa would be personally
liable for any account that the said construction
would incur; two, payment would be by
demand and not by cash on delivery.
Pursuant to the agreement, Lopez delivered
the lumber for the construction. Lopez was only
paid one-third of the total cost. The land on
which the building has been erected was
previously owned by Orosa, which was later on
purchased by the corporation. Due to the
incessant demands of Lopez, the corporation
mortgaged its properties. On an earlier relevant
date, the corporation obtained a loan with
Luzon Surety Company as surety and in turn,
the corporation executed a mortgage over the
land and building. In the registration of the land
under Act 496, such mortgage wasn’t revealed.
Also due to the demands of Lopez, Orosa
issued a deed of assignment over his shares of
stock in the corporation. As there was still an
unpaid balance, Lopez filed a case against
Orosa and Plaza theatre. He asked that Orosa
the unpaid balance; and in case defendants
failed to pay, the land and building should be
sold in public auction with the proceeds to be
applied to the balance; or that the shares of
stock be sold in public auction. Lopez also had
lis pendens be annotated in the OCT. The trial
court decided that there was joint liability
between defendants and that the material
man’s lien was only confined to the building.
ISSUE:
W/N the material men’s lien for the value of the
materials used in the construction of the
building attaches to said structure alone and
doesn’t extend to the land on which the
building is adhered to?
HELD:
The contention that the lien executed in favor
of the furnisher of materials used for the
construction and repair of a building is also
extended to land on which the building was
constructed is without merit. For while it is true
that generally, real estate connotes the land
and the building constructed thereon, it is
obvious that the inclusion of the building in the
enumeration of what may constitute real
properties could only mean one thing—that a
building is by itself an immovable property.
Moreover, in the absence ofany specific
provision to the contrary, a building is an
immovable property irrespective of whether or
not said structure and the land on which it is
adhered to belong to the same owner.
Appellant invoked Article 1923 of the Spanish
Civil Code, which provides—“With respect to
determinate real property and real rights of the
debtor, the following are preferred: xxx Credits
for reflection, not entered or recorded, and only
with respect to other credits different from
those mentioned in four next preceding
paragraphs.” Close examination of the
abovementioned provision reveals that the law
gives preference to unregistered refectionary
credits only with respect to the real estate upon
which the refectionary or work was made. This
being so, the inevitable conclusion must be
that the lien so created attaches merely to the
immovable property for the construction or
repair of which the obligation was incurred.
Therefore, the lien in favor of appellant for the
unpaid value of the lumber used in the
construction of the building attaches only to
said structure and to no other property of the
obligors.
ABB
Associated Insurance and Surety Company
v. Iya
103 SCRA 972
DOCTRINE:A building is an immovable
property irrespective of where or not said
structure and the land on which it is adhered to
belong to the same owner.
FACTS:
Spouses Adriano Valino and Lucia A. Valino
own a house of strong materials. They filed a
bond of P 11,000.00 subscribed by the
Associated Insurance and Surety Co., Inc. and
as a counter-guaranty, the spouses Valino
executed an alleged chattel mortgage on the
aforementioned house in favor of the surety
company.
The parcel of land on which the house is
erected was still registered in the name of the
Philippine Realty Corporation but was able to
obtain the same from them after full payment of
the purchase price. The Valinos acquired
another loan from Isabel Iya for P12,000.00,
executing a real estate mortgage over the
house and lot. However, they were unable to
pay off their other loan which caused the
foreclosure of the chattel mortgage. The surety
company was awarded the land as the highest
bidder in the auction but later on discovered
that the land was subject to a real estate
mortgage. The surety company then requested
that the house and lot be excluded from the
real estate mortgage. Iya, in her answer, said
that she had a real right over the property and
that the chattel mortgage on which the
foreclosure was based should be declared null
and void for non-compliance with the form
required by law. The CA ruled that the
foreclosure of the real estate mortgage is
limited to the land alone and they awarded the
structure to the surety company saying that the
house is a personal property and may be
subject to chattel mortgage.
ISSUE:
Which of the mortgages should have
preference?
HELD:
It was held in Lopez vs. Orosa that the building
is an immovable itself, separate and distinct
from the land. A building is an immovable
property irrespective of whether or not said
structure and the land on which it is adhered to
belong to the same owner.
Only personal properties can be the subject of
a chattel mortgage and since the structure in
this case is an immovable, it cannot subject to
a chattel mortgage. Therefore the chattel
mortgage and the sale on which it was based
should be declared null and void. Also, while it
is true that said document was registered in the
Chattel Mortgage Register of Rizal, this act
produced no effect whatsoever for where the
interest conveyed is in the nature of a real
property, the registration of the document in
the registry of chattels is merely a futile act
which would produce no legal effect insofar as
the building is concerned.
FZC
Bicerra v. Teneza
G.R. No. L-16218, 6 SCRA 648
DOCTRINE: 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 it ceases to exist, hence its
character as an immovable likewise ceases.
FACTS:
The Bicerras are supposedly the owners of the
house (PhP 20,000) 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.
The Supreme Court affirmed the order
appealed. Having been admitted in forma
pauperis, no costs were adjudged.
ISSUE:
WON the house is immovable property even if
it is on the land of another
HELD:
House is immovable property even if situated
on land belonging to a different owner;
Exception, when demolished.
LNAC
Evangelista v. Alto Surety & Insurance Co.,
Inc.
G.R. No. L-11139
DOCTRINE: 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.
When the rules speak of personal property,
property which is ordinarily so considered is
meant; and when real property is spoken of, it
means property which is generally known as
real property. The regulations were never
intended to suit the consideration that parties
may have privately given to the property levied
upon.
FACTS:
Petitioner Santos Evangelista instituted a Civil
Case for a sum of money. He obtained a writ of
attachment, which levied upon a house, built
by Rivera on a land situated in Manila and
leased to him, by filing copy of said writ and the
corresponding notice of attachment with the
Office of the Register of Deeds of Manila.
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. The definite
deed of sale was issued to him 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 to the Alto Surety &
Insurance Co., Inc., respondent herein, and
that the latter is now the true owner of said
property. It appears that a definite deed of sale
of the same house had been issued to
respondent, as the highest bidder at an auction
sale held in compliance with a writ of
execution. Hence, Evangelista instituted the
present action against respondent and Rivera,
for the purpose of establishing his
(Evangelista) title over said house, securing
possession thereof, apart from recovering
damages.
In its answer, respondent alleged that it has a
better right to the house, because the sale
made, and the definite deed of sale executed,
in its favor, on September 29, 1950 and May
10, 1952, respectively, precede the sale to
Evangelista (October 8, 1951) and the definite
deed of sale in his favor (October 22, 1952).
Rivera, in effect, joined forces with respondent.
CFI rendered judgment for Evangelista,
sentencing Rivera and respondent to deliver
the house in question to petitioner herein and
to pay him, jointly and severally from October,
1952, until said delivery, plus costs.
On appeal taken by respondent, the above
decision was reversed by the CA 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.
Evangelista now seeks a review by certiorari.
ISSUE:
Whether 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, or as personal property.
HELD:
Said house is not personal property, much less
a debt, credit or other personal property not
capable of manual delivery, but immovable
property. As explicitly held, in Laddera vs.
Hodges, "a true building (not merely
superimposed on the soil) is immovable or real
property, whether it is erected by the owner of
the land or by usufructuary or lessee.
It is true that the parties to a deed of chattel
mortgage may agree to consider a house as
personal property for purposes of said contract.
However, this view is good only insofar as the
contracting parties are concerned. It is based,
partly, upon the principle of estoppel. Neither
this principle, nor said view, is applicable to
strangers to said contract. Much less is it in
point where there has been no contract
whatsoever, with respect to the status of the
house involved, as in the case at bar.
The rules on execution do not allow, and, we
should not interpret them in such a way as to
allow, the special consideration that parties to
a contract may have desired to impart to real
estate, for example, 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. When the rules speak of
personal property, property which is ordinarily
so considered is meant; and when real
property is spoken of, it means property which
is generally known as real property. The
regulations were never intended to suit the
consideration that parties may have privately
given to the property levied upon. Enforcement
of regulations would be difficult were the
convenience or agreement of private parties to
determine or govern the nature of the
proceedings.
The mere fact that a house was the subject of
the chattel mortgage and was considered as
personal property by the parties does not make
said house personal property for purposes of
the notice to be given for its sale of public
auction. This ruling is demanded by the need
for a definite, orderly and well defined
regulation for official and public guidance and
would prevent confusion and
misunderstanding.
The foregoing considerations apply, with equal
force, to the conditions for the levy of
attachment, for it similarly affects the public
and third persons.
TKDC
Leung Yee v. Strong Machinery Co.
G.R. No. L-11658
DOCTRINE: The mere fact that the parties
decided to deal with the building as personal
property does not change its character as real
property. Neither the original registry in the
chattel mortgage registry nor the annotation in
said registry of the sale of the mortgaged
property had any effect on the building.
FACTS:
Compañia Agricola Filipina bought several rice-
cleaning machinery from a machinery
company, Frank L. Strong Machinery Company
and executed a chattel mortgage to secure
payment of the purchase price. The deed of
mortgage includes the building where the
machinery was installed without any reference
to the land on which it stood. Since Compañia
Agricola Filipina failed to pay when due, the
mortgaged property was sold by the sheriff and
was bought by the machinery company.
Few weeks later, Compañia Agricola Filipina
executed a deed of sale of the land where the
building stood to the machinery company. In
effect, the machinery company possessed the
building when the sale took place and
continued its possession ever since.
When the chattel mortgage was executed,
Compañia Agricola Filipina executed another
mortgage in favor of Yee over the building to
pay its debt to the machinery company. Since
Compañia Agricola Filipina failed to pay when
due, Yee secured a judgment to levy execution
upon the building and bought the building at
the sheriff’s sale; Yee secured the sheriff’s
certificate of sale and registered it in the land
registry.
When the execution was levied upon the
building, the machinery company filed with the
sheriff a sworn statement setting up its claim of
title and demanding the release of property
from the levy. On the other hand, Yee filed an
action to recover possession of the building
from the machinery company. Trial court ruled
in favor of the machinery company on the basis
of Article 1473 of the Civil Code; it ruled that
the machinery company registered the title to
the building prior to the registration date of
Yee’s certificate.
ISSUE:
Whether or not the nature of property is
changed by its registration in the Chattel
Mortgage Registry. -- NO
HELD:
The registry under Article 1473 of the Civil
Code refers to registry of real property and the
annotation or inscription of a deed of sale of
real property in a chattel mortgage registry
cannot be given the legal effect of an
inscription in the registry of real property.
The Chattel Mortgage Law contemplates
mortgages of personal property. The sole
purpose and object of the chattel mortgage
registry is the registration of personal property
mortgages executed in the manner and form
prescribed in the statute.
In this case, the building where the rice-
cleaning machinery was installed was real
property. The mere fact that the parties dealt
with it as separate and apart from the land on
which it stood does not change its character as
real property. Neither the original registry of the
building in the chattel mortgage nor the
annotation of sale of the mortgaged property in
the registry had any effect on the building’s
nature as immovable property.
AMD
Standard Oil Co. of New York v. Jaramillo
44 SCRA 630
DOCTRINE:The duties of a register of deeds in
respect to the registration of chattel mortgage
are of a 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.
FACTS:
Gervasia de la Rosa, Vda. de Vera, was the
lessee of a parcel of land situated in Manila
and owner of the house built thereon. She
executed a chattel mortgage in favor of
Standard Oil Co. to convey both the leasehold
interest in said lot and the building.After the
document had been duly acknowledge and
delivered, petitioner presented it to the
respondent, Joaquin Jaramillo, as ROD of
Manila, to be recorded in the book of record of
chattel mortgages. Upon examination of the
instrument, Jaramillo was of the opinion that it
was not a chattel mortgage as the interest
mortgaged did not appear to be personal
property, within the meaning of the Chattel
Mortgage Law, and registration was refused on
this ground only. So, petitioner sought for a
peremptory mandamus to compel the
respondent to record the said document in the
register. Jaramillo interposed a demurrer
before the SC.
ISSUE:
W/N the ROD can refuse the registration of a
Chattel Mortgage? NO
HELD:
It is his duty to accept the proper fee and place
the instrument on record. The duties of a
register of deeds in respect to the registration
of chattel mortgage are of a 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 original provisions touching this matter are
contained in section 15 of the Chattel Mortgage
Law (Act No. 1508), as amended by Act No.
2496; but these have been transferred to
section 198 of the Administrative Code. There
is nothing in any of these provisions conferring
upon the register of deeds any authority
whatever in respect to the "qualification”, of
chattel mortgage. His duties in respect to such
instruments are ministerial only. 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 nobody's rights
except as a specifies of notice.
Articles 334 and 335 of the Civil Code supply
no absolute criterion for discriminating between
real property and personal property for purpose
of the application of the Chattel Mortgage Law.
Those articles state rules which, considered as
a general doctrine, are law in this jurisdiction;
but it must not be forgotten that under given
conditions property may have character
different from that imputed to it in said articles.
It is undeniable that 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.
CRF
Sibal v. Valdez
G.R. No. L-27532
DOCTRINE:For the purpose of attachment and
execution, and for the purposes of the Chattel
Mortgage Law, "ungathered products" have the
nature of personal property. (batasnatin)
FACTS:
As a first cause of action the plaintiff alleged
that the defendant Vitaliano Mamawal, deputy
sheriff of the Province of Tarlac, by virtue of a
writ of execution issued by the Court of First
Instance of Pampanga, attached and sold to
the defendant Emiliano J. Valdez the sugar
cane planted by the plaintiff and his tenants on
seven parcels of land. That within one year
from the date of the attachment and sale the
plaintiff offered to redeem said sugar cane and
tendered to the defendant Valdez the amount
sufficient to cover the price paid by the latter,
the interest thereon and any assessments or
taxes which he may have paid thereon after
the purchase, and the interest corresponding
thereto and that Valdez refused to accept the
money and to return the sugar cane to the
plaintiff.
One of the defenses of the defendant Emiliano
J. Valdez is that the sugar cane in question
had the nature of personal property and was
not, therefore, subject to redemption. The trial
court hold that the sugar cane in question was
personal property and, as such, was not
subject to redemption.
ISSUE:
Whether the sugar cane in question is personal
or real property under civil code? Under chattel
mortgage law?
HELD:
The court ruled that It is contended that sugar
cane comes under the classification of real
property as "ungathered products" in
paragraph 2 of article 334 of the Civil Code.
Said paragraph 2 of article 334 enumerates as
real property the following: Trees, plants, and
ungathered products, while they are annexed
to the land or form an integral part of any
immovable property."
We may, therefore, conclude that paragraph 2
of article 334 of the Civil Code has been
modified by section 450 of the Code of Civil
Procedure and by Act No. 1508, in the sense
that, for the purpose of attachment and
execution, and for the purposes of the Chattel
Mortgage Law, "ungathered products" have the
nature of personal property. The lower court,
therefore, committed no error in holding that
the sugar cane in question was personal
property and, as such, was not subject to
redemption.
MPF
Tsai v. CA
G.R. No. 120098
DOCTRINE: Even if the properties are
immovable by nature, nothing detracts the
parties from treating them as chattels to secure
an obligation under the principle of estoppel.
FACTS:
 ● EVERTEX secured a loan from
PBC, guaranteed by 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.
ISSUE:
Whether or not the (immovable) properties in
question can be entered into a chattel
mortgage. -- YES
HELD:
An immovable may be considered a personal
property if there is a stipulation as when it is
used as security in the payment of an
obligation where a chattel mortgage is
executed over it, as in the case at bar. While it
is true that the controverted properties appear
to be immobile, a perusal of the contract of real
estate mortgage and chattel mortgage by the
parties gives a contrary indication. 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.
AMDG
Yap v. Tanada
G.R. No. L-32917
DOCTRINE: The Civil code considers as
immovable property among others, anything
“attached to an immovable in a fixed manner,
in such a way that it cannot be separated
therefrom without breaking the material or
deterioration of the object”
FACTS:
Goulds Pumps International (Phil.), Inc. (herein
Goulds) filed a complaint against Yap and his
wife seeking to recover the balance of the
price and installation of the water pump in the
latter’s residence. The city court declared Yap
and his wife in default and rendered a
judgment in favor of Goulds. Yap appealed to
the CFI wherein Judge Tanada was residing.
Yap was again declared in default and
judgment was again rendered in favor of
Goulds. Later on, Judge Tanada granted
Gould’s Motion for Issuance of Writ of
Execution. Subsequently, the water pump was
sold in a public auction in favor of Goulds being
the highest bidder. Another writ of execution
was issued as regards the removal of the water
pump and delivery of such to Goulds. Yap is
questioning validity of the auction sale and
praying that it be annulled as well as the writ of
execution. Yap is alleging that the water pump
is considered as an immovable property
because it is installed in his residence. He also
argued that being an immovable property, a
notice must be made before the auction sale
pursuant to the Rules of Court. It is noted that
Yap filed several motion of reconsideration to
which all were denied.
ISSUE:
Whether or not the water pump is an
immovable property -- NO
HELD:
The Civil code considers as immovable
property among others, anything “attached to
an immovable in a fixed manner, in such a way
that it cannot be separated therefrom without
breaking the material or deterioration of the
object”
The water pump involved in this case does not
satisfy the above description. It is highly
possible to remove the water pump without it
breaking or deteriorating by simply loosening
the bolts or dismantling the fasteners that were
used to attach or install it in his house.
GCG
Mindanao Bus Co. v. City Assessor and
Treasurer
G.R. No. L-17870
DOCTRINE: Movable equipment, to be
immobilized in contemplation of Article 415 of
the Civil Code, must be the essential and
principal elements of an industry or works
which are carried on in a building or on a piece
of land. Thus, where the business is one of
transportation, which is carried on without a
repair or service shop, and its rolling
equipment is repaired or serviced in a shop
belonging to another, the tools and equipment
in its repair shop which appear movable are
merely incidentals and may not be considered
immovables, and, hence, not subject to
assessment as real estate for purposes of the
real estate tax.
FACTS:
Petitioner is a public utility solely engaged in
transporting passengers and cargoes by motor
trucks, over its authorized lines in the Island of
Mindanao, collecting rates approved by the
Public Service Commission.
The petitioner is the owner of the land where it
maintains and operates a garage for its TPU
motor trucks; a repair shop; blacksmith and
carpentry shops, and with these machineries
which are placed therein, its TPU trucks are
made; body constructed; and same are
repaired in a condition to be serviceable in the
TPU land transportation business it operates.
These machineries have never been or were
never used as industrial equipments to
produce finished products for sale, nor to repair
machineries, parts and the like offered to the
general public indiscriminately for business or
commercial purposes for which petitioner has
never engaged in,
The City Assessor of CDO then assessed a
P4,400 realty tax on said machineries and
repair equipment. This was then appealed to
the Court of Tax Appeals (CTA) who sustained
the respondent city assessor's ruling.
ISSUE:
Whether or not the machineries and the
equipments are considered immobilized and
thus subject to a realty tax. -- NO
HELD:
The Supreme Court held a decision for the
petition for review to be set aside and the
equipments in question declared not subject to
assessment as real estate for the purposes of
the real estate tax.
The law that governs the determination
of the question at issue is as follows:
Art. 415. The following are immovable
property:
xxx xxx 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; (Civil Code of the
Phil.)
Aside from the element of essentiality the
above-quoted provision also requires that the
industry or works be carried on in a building or
on a piece of land. Thus in the case of
Berkenkotter vs. Cu Unjieng, supra, the
"machinery, liquid containers, and instruments
or implements" are found in a building
constructed on the land. A sawmill would also
be installed in a building on land more or less
permanently, and the sawing is conducted in
the land or building.
But in the case at bar the equipments in
question are destined only to repair or service
the transportation business, which is not
carried on in a building or permanently on a
piece of land, as demanded by the law. Said
equipments may not, therefore, be deemed
real property.
Resuming what we have set forth above, we
hold that the equipments in question are not
absolutely essential to the petitioner's
transportation business, and petitioner's
business is not carried on in a building,
tenement or on a specified land, so said
equipment may not be considered real estate
within the meaning of Article 415 (c) of the Civil
Code.
Said equipments are not considered
immobilized as they are merely incidental, not
essential and principal to the business of the
petitioner. The transportation business could
be carried on without repair or service shops of
its rolling equipment as they can be repaired or
services in another shop belonging to another
VCL IV
Fels Energy, Inc. v. Province of Batangas,
et al.
G.R. No. 168557
DOCTRINE: Article 415 (9) of the New Civil
Code provides that “docks and structures
which, though floating, are intended by their
nature and object to remain at a fixed place on
a river, lake, or coast” are considered
immovable property. Thus, power barges are
categorized as immovable property by
destination, being in the nature of machinery
and other implements intended by the owner
for an industry or work which may be carried
on in a building or on a piece of land and which
tend directly to meet the needs of said industry
or work.
FACTS:
On January 18, 1993, National Power
Corporation (NPC) entered into a lease
contract with Polar Energy, Inc. over 3×30 MW
diesel engine power barges moored at Balayan
Bay in Calaca, Batangas. The contract,
denominated as an Energy Conversion
Agreement, was for a period of five years.
Article 10 states that NPC shall be responsible
for the payment of taxes. (other than (i) taxes
imposed or calculated on the basis of the net
income of POLAR and Personal Income Taxes
of its employees and (ii) construction permit
fees, environmental permit fees and other
similar fees and charges. Polar Energy then
assigned its rights under the Agreement to Fels
despite NPC’s initial opposition.
FELS received an assessment of real property
taxes on the power barges from Provincial
Assessor Lauro C. Andaya of Batangas City.
FELS referred the matter to NPC, reminding it
of its obligation under the Agreement to pay all
real estate taxes. It then gave NPC the full
power and authority to represent it in any
conference regarding the real property
assessment of the Provincial Assessor. NPC
filed a petition with the Local Board
Assessment Appeals (LBAA). The LBAA
ordered Fels to pay the real estate taxes. The
LBAA ruled that the power plant facilities, while
they may be classified as movable or personal
property, are nevertheless considered real
property for taxation purposes because they
are installed at a specific location with a
character of permanency. The LBAA also
pointed out that the owner of the barges–
FELS, a private corporation–is the one being
taxed, not NPC. A mere agreement making
NPC responsible for the payment of all real
estate taxes and assessments will not justify
the exemption of FELS; such a privilege can
only be granted to NPC and cannot be
extended to FELS. Finally, the LBAA also ruled
that the petition was filed out of time.
Fels appealed to the Central Board
Assessment Appeals (CBAA). The CBAA
reversed and ruled that the power barges
belong to NPC; since they are actually, directly
and exclusively used by it, the power barges
are covered by the exemptions under Section
234(c) of R.A. No. 7160. As to the other
jurisdictional issue, the CBAA ruled that
prescription did not preclude the NPC from
pursuing its claim for tax exemption in
accordance with Section 206 of R.A. No. 7160.
Upon MR, the CBAA reversed itself.
ISSUE: Whether or not barges are considered
as real property, thus can be subject to real
property tax -- YES
HELD:
The CBAA and LBAA power barges are real
property and are thus subject to real property
tax.
In Consolidated Edison Company of New York,
Inc., et al. v. The City of New York, et al., a
power company brought an action to review
property tax assessment. On the city’s motion
to dismiss, the Supreme Court of New York
held that the barges on which were mounted
gas turbine power plants designated to
generate electrical power, the fuel oil barges
which supplied fuel oil to the power plant
barges, and the accessory equipment mounted
on the barges were subject to real property
taxation.
Moreover, Article 415 (9) of the New Civil Code
provides that “docks and structures which,
though floating, are intended by their nature
and object to remain at a fixed place on a river,
lake, or coast” are considered immovable
property. Thus, power barges are categorized
as immovable property by destination, being in
the nature of machinery and other implements
intended by the owner for an industry or work
which may be carried on in a building or on a
piece of land and which tend directly to meet
the needs of said industry or work.
FXRL
Davao Sawmill Co. v. Castillo
G.R. No. 40411,
DOCTRINE: Generally, machinery becomes
immobilized when placed by the owner of the
plant or property. This rule does not apply
should the machinery be placed by any other
person such as a tenant or usufructuary.
FACTS:
● The petitioner company operates
a sawmill in barrio Tigatu, Davao.
● Said facility contained both
movable and immovable property
(machines and other such implements).
● However, the land on which it is
situated belongs to another person.
● The parties executed a lease
contract providing that upon the
expiration or termination of such lease,
the following shall happen:
o The ownership of all structures
and improvements introduced by
the petitioner company shall be
transferred to the respondents
without any cost or obligation to
pay.
o The machines and their
accessories shall not be included
in said transfer.
● It was noted by the court that in a
previous case between the two parties,
judgment was rendered against the
petitioner company upon which a writ of
execution was brought against its
machines (as personalty) in favor of
Castilllo, et al.
● Additionally, the records of the
current case reflected that the petitioner
company had treated its machinery as
personal property by executing chattel
mortgages on them in favor of third
persons.
● Petitioner company contends that
its machines are immovable under the
first and fifth paragraphs of Article 334
(now Article 415) of the Civil Code.
ISSUE:
W/N the machines of the petitioner company
are movable or immovable property.
HELD:
The machines are movable.
The court observed that the petitioner company
failed to register its protest at the time its
machines were sold. Generally, this inaction
would be inconclusive but it is indicative of the
intention impressed upon the property in
question.
This is so because while machines are
generally movable property, they may
nevertheless be “immobilized” by destination or
purpose subject to several conditions.
This conclusion finds its ground under the fifth
paragraph of Article 415. Here, machinery
becomes immobilized when placed by the
owner of the plant or property. This rule does
not apply should the machinery be placed by
any other person such as a tenant or
usufructuary.
Applying the rule to the case on hand, the
machinery was placed by the petitioner
company who was merely a lessee. As such,
the equipment was never immobilized in the
first place.
RSDM
Makati Leasing and Financial Corporation v.
Wearever Textile Mills, Inc.
G.R. No. L-58469
DOCTRINE:If a house of strong materials, like
what was involved in the above Tumalad case,
may be considered as personal property for
purposes of executing a chattel mortgage
thereon as long as the parties to the contract
so agree and no innocent third party will be
prejudiced thereby, there is absolutely no
reason why a machinery, which is movable in
its nature and becomes immobilized only by
destination or purpose, may not be likewise
treated as such. This is really because one
who has so agreed is estopped from denying
the existence of the chattel mortgage.
FACTS:
The private respondent Wearever Textile Mills,
Inc., discounted and assigned several
receivables with the former under a Receivable
Purchase Agreement in order to obtain
financial accommodations from herein
petitioner Makati Leasing and Finance
Corporation. To secure the collection of the
receivables assigned, private respondent
executed a Chattel Mortgage over certain raw
materials inventory as well as a machinery
described as an Artos Aero Dryer Stentering
Range.
Upon default, petitioner filed a petition for
extrajudicial foreclosure of the properties
mortgage to it. The Deputy Sheriff assigned to
implement the foreclosure failed to gain entry
into private respondent's premises and was not
able to effect the seizure of the aforedescribed
machinery. Petitioner thereafter filed a
complaint for judicial foreclosure with the Court
of First Instance of Rizal.
Acting on petitioner's application for replevin,
the lower court issued a writ of seizure, the
enforcement of which was however
subsequently restrained upon private
respondent's filing of a motion for
reconsideration. After several incidents, the
lower court finally issued an order lifting the
restraining order for the enforcement of the writ
of seizure and an order to break open the
premises of private respondent to enforce said
writ. The lower court reaffirmed its stand upon
private respondent's filing of a further motion
for reconsideration.
The Court of Appeals, in certiorari and
prohibition proceedings subsequently filed by
herein private respondent, set aside the Orders
of the lower court and ordered the return of the
drive motor seized by the sheriff pursuant to
said Orders, after ruling that the machinery in
suit cannot be the subject of replevin, much
less of a chattel mortgage, because it is a real
property pursuant to Article 415 of the new
Civil Code, the same being attached to the
ground by means of bolts and the only way to
remove it from respondent's plant would be to
drill out or destroy the concrete floor, the
reason why all that the sheriff could do to
enfore the writ was to take the main drive
motor of said machinery. The appellate court
rejected petitioner's argument that private
respondent is estopped from claiming that the
machine is real property by constituting a
chattel mortgage thereon.
ISSUE:
Whether or not the property in suit is real
property – NO. It is a personal property
HELD:
Examining the records of the instant case, We
find no logical justification to exclude the rule
out, as the appellate court did, the present
case from the application of the abovequoted
pronouncement. If a house of strong materials,
like what was involved in the above Tumalad
case, may be considered as personal property
for purposes of executing a chattel mortgage
thereon as long as the parties to the contract
so agree and no innocent third party will be
prejudiced thereby, there is absolutely no
reason why a machinery, which is movable in
its nature and becomes immobilized only by
destination or purpose, may not be likewise
treated as such. This is really because one
who has so agreed is estopped from denying
the existence of the chattel mortgage.
In rejecting petitioner's assertion on the
applicability of the Tumalad doctrine, the Court
of Appeals 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
of the subject machinery as chattel by the
private respondent is indicative of intention and
impresses upon the property the character
determined by the parties. As stated 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 real
property, as long as no interest of third parties
would be prejudiced thereby.
MRAM
Board of Assessment Appeals v. MERALCO
10 SCRA 68
DOCTRINE: The steel towers or poles of
MERALCO are not real properties because 1)
they are not adhered to the soil, 2) they are not
attached to an immovable property and can be
dismantled without breaking or deteriorating
the material and 3) they are not machineries
nor instruments or implements intended for the
industry or works on the land
FACTS:
Generated by its hydroelectric plant,
MERALCO’s electric power is transmitted from
Laguna to Manila through electric transmission
wires. These electric transmission wires which
carry high voltage current, are fastened to
insulators attached on steel towers. MERALCO
has constructed 40 of these steel towers within
Quezon City, on land belonging to it.
Three steel towers were the subject of this
dispute. When inspected, the findings disclose
that there was no concrete foundation but there
was adobe stone underneath. Further, it could
not be ascertained whether said adobe stone
was purposely or not.
From this, the City Assessor of Quezon City
declared the steel towers subject to real
property tax. MERALCO, however, protested
the assessment saying that the steel towers
are considered poles and according to their
franchise, it is exempt from taxation
ISSUE:
Whether or not the steel towers or poles of the
MERALCO are considered real properties,
hence subject to real property tax?
HELD:
The Supreme Court held in the negative. The
Court said that the steel towers are personal
properties. The Court based their ruling on the
enumeration of immovable properties in Art.
415 of the Civil Code.
First, the steel towers do not come within the
objects mentioned in par. 1, because they do
not constitute buildings or constructions
adhered to the soil.Moreover, they are not
construction analogous to buildings nor
adhering to the soil because as per description,
they are removable and merely attached to a
square metal frame by means of bolts, which
when unscrewed could easily be dismantled
and moved from place to place.
Second, they can not be included under
paragraph 3 since they are not attached to an
immovable in a fixed manner; they can be
separated without breaking the material or
causing deterioration upon the object to which
they are attached. In fact, each of these steel
towers or supports consists of steel bars joined
together by means of bolts, which can be
disassembled by unscrewing the bolts and
reassembled by screwing the same.
Lastly, they do not fall under paragraph 5, as
they are not machineries, receptacles,
instruments or implements. SC said that even if
they were machineries, receptacles,
instruments or implements, they are not
intended for industry or works on the land.
MERALCO is not engaged in an industry or
works in the land in which the steel supports or
towers are constructed.
FMM
Machinery & Engineering Supplies, Inc. v.
CA
G.R. No. L-7057
DOCTRINE: When the machinery and
equipment in question appeared to be attached
to the land, particularly to the concrete
foundation of said premises, in a fixed manner,
in such a way that the former could not be
separated from the latter "without breaking the
material or deterioration of the object or that in
order to remove said outfit, it became
necessary, not only to unbolt the same, but ,
also, to cut some of its wooden supports and
when, said machinery and equipment were
"intended by the owner of the tenement for an
industry" carried on said immovable and
tended, it becomes immovable property
pursuant to paragraphs 3 and 5 of Article 415
of Civil Code of the Philippines.
FACTS:
▪ On 13 March 1953,
Machinery & Engineering Supplies, Inc. (the
“Petitioner”) filed a complaint for replevin in
the Court of First Instance (“CFI”) of Manila
for the recovery of the machinery and
equipment sold and delivered to Ipo
Limestone Co., Inc and Dr. Antonio
Villarama (the “Respondents”) at their
factory in Barrio Bigti, Norzagaray, Bulacan.
▪ Upon application ex-parte
of the Petitioner and upon approval of its
bond sum of P15,769.00, herein
Respondent Judge issued an order
directing the Provincial Sheriff of Bulacan to
seize and take immediate possession of the
properties specified in the said order.
▪ On 19 March 1953, two
deputy sheriffs of Bulacan, Ramon S. Roco
and a crew of technician and laborers
proceeded to Bigti to carry out the CFI’s
order.
▪ Leonardo Contreras,
herein Respondent Company’s Manager
met the sheriffs and handed the latter a
letter addressed to Atty. Leopoldo C. Paled,
ex-officio Provincial Sheriff of Bulacan,
signed by the Respondent Company’s
counsel, protesting against the seizure of
the properties on the ground that the same
are not personal properties.
▪ Roco and the deputy
sheriffs contended that their duty is
ministerial and went ahead to the factory.
At the factory, Rocco’s attention was called
to the fact that the equipment could not
possibly be dismantled without causing
damages or injuries to the wooden frames
attached to them but Roco insisted in
dismantling the same on his own
responsibility and alleged that the bond was
posted for such eventuality. Thus, the
deputy sheriffs directed that some of the
machine’s supports be cut.
▪ On 20 March 1953, the
Respondent Company filed an urgent
motion, with a counter-bond in the amount
of P15,769 for the return of the properties
seized by the sheriffs. On the same day,
the trial court issued an order, directing the
Provincial Sheriff of Bulacan to return the
machinery and equipment to the place
where they were installed at the time of
seizure.
▪ On 2 March 1953, the
deputy sheriffs returned the said properties
by depositing them along the road near the
quarry of the Respondent Company,
without inventory and re-installation in its
former position and replacing the destroyed
posts, which rendered its use impracticable.
▪ On 23 March 1953,
Respondents’ counsel asked the provincial
sheriff if the machinery and equipment
dumped on the road would be re-installed
to their former position and condition. The
next day, the provincial sheriff filed an
urgent motion in court manifesting the Roco
 had been asked to furnish the sheriff’s
office with the expenses, laborers, technical
men and equipment to carry into effect the
courts order, among other things but that
Roco absolutely refused and asking the
Court that Respondent Company be
ordered to provide the required aid or
relieve the sheriff of the duty of complying
to the said order.
▪ On 30 March 1953, the
trial court ordered the provincial sheriff and
the Petitioner Company to reinstate the
machinery and equipment removed by
them in their original condition. An urgent
motion of the provincial sheriff dated 15
April 1953 requesting for an extension was
denied and on 4 May 1953, the trial court
ordered the Petitioner Company to furnish
the provincial sheriff with the necessary
funds and technical crew and laborers to
reinstate the machinery and equipment.
▪ The case was appealed
before the Court of Appeals but the latter
dismissed the same for lack of merit.
▪ Hence this petition filed
before the Supreme Court (the “SC”). The
Petitioner argued that the respondent judge
had completely disregarded his
manifestation that the machinery and
equipment seized were and still are the
Petitioner's property until fully paid for and
such never became immovable. The
question of ownership and the applicability
of Art. 415 of the new Civil Code are
immaterial in the determination of the only
issue involved in this case.
ISSUE:
Whether the machineries and equipments can
be considered as personal properties subject
to replevin. -- NO
HELD:
The SC held that the special civil action known
as replevin, governed by Rule 62 of Court, is
applicable only to "personal property". When
the sheriff repaired to the premises of
respondent company, the machinery and
equipment in question appeared to be attached
to the land, particularly to the concrete
foundation of said premises, in a fixed manner,
in such a way that the former could not be
separated from the latter "without breaking the
material or deterioration of the object." Hence,
in order to remove said outfit, it became
necessary, not only to unbolt the same, but,
also, to cut some of its wooden supports.
Moreover, said machinery and equipment were
"intended by the owner of the tenement for an
industry" carried on said immovable and
tended." For these reasons, they were already
immovable property pursuant to paragraphs 3
and 5 of Article 415 of Civil Code of the
Philippines, which are substantially identical to
paragraphs 3 and 5 of Article 334 of the Civil
Code of Spain. As such immovable property,
they were not subject to replevin.
RGGM
Punsalan, Jr. v. Vda. De Lacsamana
121 SCRA 331
DOCTRINE: Buildings are always immovable
under the Civil Code. Separate treatment by
the parties of building from the land in which it
stood does not change the immovable
character of the building.
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.
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 his allegations was that
the bank did not own the building and thus, it
should not be included in the said deed.
Petitioner’s complaint was dismissed for
improper venue. The trial court held that the
action being filed in actuality by petitioner is a
real action involving his right over a real
property.
ISSUE:
Whether or not the warehouse is an immovable
and must be tried in the province where the
property lies.
HELD:
Warehouse claimed to be owned by
petitioner is an immovable or real property.
Buildings are always immovable under the Civil
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 did not change
its character as immovable property.
MCSS
Prudential Bank v. Panis
153 SCRA 390
FACTS:
Plaintiff-spouses Magcale secured two loans
over a 2-storey residential building.
For failure of the plaintiffs to pay their
obligation to defendant Bank after it became
due, the deed of the Real Estate Mortgage
were extrajudicially foreclosed.
ISSUE: WON a valid real estate mortgage can
be constituted on the building. -- YES
HELD:
Inclusion of building separate and distinct from
land, in the provision of law can only mean that
a building is by itself an immovable property. A
building by itself may be mortgaged apart from
the land on which it has been built.
NKVS
Tumalad v. Vicencio
41 SCRA 143
DOCTRINE: The view that parties to a deed of
chattel mortgage may agree to consider a
house as personal property for the purposes of
said contract, "is good only insofar as the
contracting parties are concerned. It is based,
partly, upon the principle of estoppel.”
FACTS:
On 1 September 1955 defendants executed a
chattel mortgage in favor of plaintiffs over their
house located at Quiapo, Manila, which were
being rented from Madrigal & Company, Inc.
The mortgage was registered in the Registry of
Deeds of Manila on 2 September 1955. The
mortgage was executed to guarantee a loan of
P4,800.00 received from plaintiffs. It was also
agreed that default in the payment of any of the
amortizations, would cause the remaining
unpaid balance to become immediately due
and Payable and the Chattel Mortgage will be
enforceable in accordance with the provisions
of Special Act No. 3135, and for this purpose,
the Sheriff of the City of Manila or any of his
deputies is hereby empowered and authorized
to sell all the Mortgagor's property after the
necessary publication in order to settle the
financial debts of P4,800.00, plus 12% yearly
interest, and attorney's fees.
When defendants defaulted in paying, the
mortgage was extrajudicially foreclosed, and
the house was sold at public auction pursuant
to the said contract. As highest bidder, plaintiffs
were issued the corresponding certificate of
sale. Thereafter, plaintiffs commenced Civil
Case No. 43073 in the municipal court of
Manila, praying, among other things, that the
house be vacated and its possession
surrendered to them, and for defendants to pay
rent of P200.00 monthly from 27 March 1956
up to the time the possession is surrendered.
MTC granted petition.
Defendants, in their answers in both the
municipal court and court a quo impugned the
legality of the chattel mortgage, claiming that
they are still the owners of the house. During
the pendency of the appeal to the Court of First
Instance, defendants failed to deposit the rent
as ordered in the decision of the municipal
court. As a result, the court granted plaintiffs
motion for execution. However, the judgment
regarding the surrender of possession to
plaintiffs could not be executed because the
subject house had been already demolished
pursuant to the order of the court in a separate
civil case for ejectment against the present
defendants for non-payment of rentals on the
land on which the house was constructed.
ISSUE:
W/N the house may be a subject of a Chattel
Mortgage. – YES, it may be the subject of a
chattel mortgage.
HELD:
Defendants predicate their theory of nullity of
the chattel mortgage on the ground that the
subject matter of the mortgage is a house of
strong materials, and, being an immovable, it
can only be the subject of a real estate
mortgage and not a chattel mortgage.
The rule about the status of buildings as
immovable property is that it is obvious that the
inclusion of the building, separate and distinct
from the land, in the enumeration of what may
constitute real properties could only mean one
thing — that a building is by itself an
immovable property irrespective of whether or
not said structure and the land on which it is
adhered to belong to the same owner.
It is undeniable that the parties to a contract
may by agreement treat as personal property
that which by nature would be real property.
The view that parties to a deed of chattel
mortgage may agree to consider a house as
personal property for the purposes of said
contract, "is good only insofar as the
contracting parties are concerned. It is based,
partly, upon the principle of estoppel.”
In a case, a mortgaged house built on a rented
land was held to be a personal property, not
only because the deed of mortgage considered
it as such, but also because it did not form part
of the land for it is now settled that an object
placed on land by one who had only a
temporary right to the same, such as the
lessee or usufructuary, does not become
immobilized by attachment. Hence, if a house
belonging to a person stands on a rented land
belonging to another person, it may be
mortgaged as a personal property as so
stipulated in the document of mortgage. It
should be noted, however that the principle is
predicated on statements by the owner
declaring his house to be a chattel, a conduct
that may conceivably estop him from
subsequently claiming otherwise.
Although there is no specific statement
referring to the subject house as personal
property, yet by ceding, selling or transferring a
property by way of chattel mortgage
defendants could only have meant to convey
the house as chattel, or at least, intended to
treat the same as such, so that they should not
now be allowed to make an inconsistent stand
by claiming otherwise.
Moreover, the subject house stood on a rented
lot to which defendants merely had a
temporary right as lessee, and although this
can not in itself alone determine the status of
the property, it does so when combined with
other factors to sustain the interpretation that
the parties, particularly the mortgagors,
intended to treat the house as personalty.
Finally, because it is the defendants
themselves, as debtors-mortgagors, who are
attacking the validity of the chattel mortgage in
this case, the doctrine of estoppel therefore
applies to the defendants, having treated the
subject house as personalty.
AMPS
Serg’s Products and Goquiola v. PCI
Leasing and Finance
338 SCRA 499
DOCTRINE: After agreeing to a contract
stipulating that a real or immovable property be
considered as personal or movable, a party is
estopped from subsequently claiming
otherwise. Hence, such property is a proper
subject of a writ of replevin obtained by the
other contracting party.
FACTS:
PCI Leasing and Finance, Inc. filed a complaint
with the RTC for a sum of money with an
application for a writ of replevin. Upon an ex-
parte application of PCI Leasing, respondent
judge issued a writ of replevin directing its
sheriff to seize and deliver the machineries and
equipment to PCI Leasing after 5 days and
upon the payment of the necessary expenses.
Serg’s filed a motion for special protective
order. This motion was opposed by PCI
Leasing on the ground that the properties
[were] still personal and therefore still subject
to seizure and a writ of replevin.
In their Reply, petitioners asserted that the
properties sought to be seized were immovable
as defined in Article 415 of the Civil Code, the
parties’ agreement to the contrary
notwithstanding. They argued that to give
effect to the agreement would be prejudicial to
innocent third parties. They further stated that
PCI Leasing was estopped from treating these
machineries as personal because the contracts
in which the alleged agreement were embodied
were totally sham and farcical.
Citing the Agreement of the parties, the
appellate court held that the subject machines
were personal property, and that they had only
been leased, not owned, by petitioners. It also
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 purchased and
imported by SERG’S became real property by
virtue of immobilization.
HELD:
The machineries herein are real properties but
are considered personal by the parties’
agreement.
The Court will resolve whether the said
machines are personal, not immovable,
property which may be a proper subject of a
writ of replevin. Rule 60 of the Rules of Court
provides that writs of replevin are issued for the
recovery of personal property only. Section 3
thereof reads:
“SEC. 3. Order. -- Upon the
filing of such affidavit and
approval of the bond, the court
shall issue an order and the
corresponding writ of replevin
describing the personal property
alleged to be wrongfully detained
and requiring the sheriff forthwith
to take such property into his
custody.”
On the other hand, Article 415 of the Civil Code
enumerates immovable or real property as
follows:
“ART. 415. The following are
immovable property:
x x x....................................x x
x....................................x x x
(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;
x x x....................................x x
x....................................x x x”
In the present case, the machines that were
the subjects of the Writ of Seizure were placed
by petitioners in the factory built on their own
land. Indisputably, they were essential and
principal elements of their chocolate-making
industry. Hence, although each of them was
movable or personal property on its own, all of
them have become “immobilized by destination
because they are essential and principal
elements in the industry.” In that sense,
petitioners are correct in arguing that the said
machines are real, not personal, property
pursuant to Article 415 (5) of the Civil Code.
Be that as it may, we disagree with the
submission of the petitioners that the said
machines are not proper subjects of the Writ of
Seizure.
The Court has held that contracting parties
may validly stipulate that a real property be
considered as personal. 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.

Hence, in Tumalad v. Vicencio, the Court
upheld the intention of the parties to treat a
house as a personal property because it had
been made the subject of a chattel mortgage.
It should be stressed, however, that our
holding -- that the machines should be deemed
personal property pursuant to the Lease
Agreement – is good only insofar as the
contracting parties are concerned. Hence,
while the parties are bound by the Agreement,
third persons acting in good faith are not
affected by its stipulation characterizing the
subject machinery as personal. In any event,
there is no showing that any specific third party
would be adversely affected.
KGS
Manarang and Manarang v. Ofilada and
Esteban
99 SCRA 108
DOCTRINE: House is personal property for
purposes of chattel mortgage only; Remains
real property. The mere fact that a house was
the subject of a chattel mortgage and was
considered as personal property by the parties
does not make said house personal property
for purposes of the notice to be given for its
sale at public auction. It is real property within
the purview of Rule 39, section 16, of the Rules
of Court as it has become a permanent fixture
on the land, which is real property.
FACTS:
Manarang obtained a loan from Esteban, and
executed a chattel mortgage over a house of
mixed materials as a security. Upon default,
Estaban brought an action to foreclose the
property mortgaged. At Manarang’s request,
the house mortgaged was to be sold at public
auction to satisfy the debt. However, before the
property could be sold, Manarang offered to
pay the sum. But the sheriff refused the tender
unless the additional amount is also paid
representing the publication of the notice in two
newspapers. Manarang contended that the
house in question should be considered as
personal property and the publication of the
notice of its sale at public auction in execution
considered unnecessary. The Court of First
Instance held that although real property may
sometimes be considered as personal
property, the sheriff was in duty bound to
cause the publication of the notice of its sale in
order to make the sale valid or to prevent its
being declared void or voidable.
ISSUE:
Can the house of Manarang be classified as
personal property since it was considered as
such in a chattel mortgage? -- NO
HELD:
The house of mixed materials levied upon on
execution, although subject of a contract of
chattel mortgage between the owner and a
third person, is real property within the purview
of Rule 39, section 16, of the Rules of Court as
it has become a permanent fixture on the land,
which is real property.
There cannot be any question that a building of
mixed materials may be the subject of a chattel
mortgage, in which case it is considered as
between the parties as personal property. The
matter depends on the circumstances and the
intention of the parties.
The general principle of law is that a building
permanently fixed to the freehold becomes a
part of it, that prima facie a house is real
estate, belonging to the owner of the land on
which it stands, even though it was erected
against the will of the landowner, or without his
consent. The general rule is otherwise,
however, where the improvement is made with
the consent of the landowner, and pursuant to
an understanding either expressed or implied
that it shall remain personal property. Nor does
the general rule apply to a building, which is
wrongfully removed from the land and placed
on the land of the person removing it.
Among the principal criteria for determining
whether property remains personally or
becomes realty are annexation to the soil,
either actual or construction, and the intention
of the parties. Personal property may retain its
character as such where it is so agreed by the
parties interested even though annexed to the
realty, or where it is affixed in the soil to be
used for a particular purpose for a short period
and then removed as soon as it has served its
purpose.
These considerations notwithstanding, we hold
that the rules on execution do not allow, and
we should not interpret them in such a way as
to allow, the special consideration that parties
to a contract may have desired to impart to real
estate, for example, 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. When the rules speak of
personal property, property which is ordinarily
so considered is meant; and when real
property is spoken of, it means property which
is generally known as real property. The
regulations were never intended to suit the
consideration that parties, may have privately
given to the property levied upon. Enforcement
of regulations would be difficult were the
convenience or agreement of private parties to
determine or govern the nature of the
proceedings. We, therefore, hold that the mere
fact that a house was the subject of a chattel
mortgage and was considered as personal
property by the parties does not make said
house personal property for purposes of the
notice to be given for its sale at public auction.
This ruling is demanded by the need for a
definite, orderly and well-defined regulation for
official and public guidance and which would
prevent confusion and misunderstanding
JPOT
Navarro v. Pineda
9 SCRA 631
DOCTRINE:Estoppel, in that "the parties have
so expressly agreed" in the mortgage to
consider the house as chattel "for its smallness
and mixed materials of sawali and wood".
FACTS:
December 14, 1959, Rufino G. Pineda and his
mother Juana Gonzales (married to Gregorio
Pineda), borrowed from plaintiff Conrado P.
Navarro, the sum of P2,500.00, payable 6
months after said date or on June 14, 1959. To
secure the indebtedness, Rufino executed a
document captioned "DEED OF REAL
ESTATE and CHATTEL MORTGAGES",
whereby Juana Gonzales, by way of Real
Estate Mortgage hypothecated a parcel of
land, belonging to her, registered with the
Register of Deeds of Tarlac, under Transfer
Certificate of Title No. 25776, and Rufino G.
Pineda, by way of Chattel Mortgage,
mortgaged his two-story residential house,
having a floor area of 912 square meters,
erected on a lot belonging to Atty. Vicente
Castro, located at Bo. San Roque, Tarlac,
Tarlac; and one motor truck, registered in his
name, under Motor Vehicle Registration
Certificate No. A-171806. Both mortgages
were contained in one instrument, which was
registered in both the Office of the Register of
Deeds and the Motor Vehicles Office of Tarlac.
After failing to settle amount due, respondent
was then granted an extension on June
30,1960 and consequently July 30th of the
same year for still being unable to comply.
Rufino Pineda then issued a document entitled
"Promise," stating that defendant would no
longer ask for further extension and there
would be no need for any formal demand, and
plaintiff could proceed to take whatever action
he might desire to enforce his rights, under the
said mortgage contract.
On August 10, 1960, plaintiff filed a complaint
for foreclosure of the mortgage and for
damages, which consisted of liquidated
damages in the sum of P500.00 and 12% per
annum interest on the principal, effective on
the date of maturity, until fully paid. Defendants
admit that the loan is overdue but deny that
portion of paragraph 4 of the First Cause of
Action which states that the defendants
unreasonably failed and refuse to pay their
obligation to the plaintiff the truth being the
defendants are hard up these days and
pleaded to the plaintiff to grant them more time
within which to pay their obligation and the
plaintiff refused;
WHEREFORE, in view of the foregoing it is
most respectfully prayed that this Honorable
Court render judgment granting the defendants
until January 31, 1961, within which to pay
their obligation to the plaintiff.
November 11, 1960, however, the parties
submitted a Stipulation of Facts, wherein the
defendants admitted the indebtedness, the
authenticity and due execution of the Real
Estate and Chattel Mortgages; that the
indebtedness has been due and unpaid since
June 14, 1960; that a liability of 12% per
annum as interest was agreed, upon failure to
pay the principal when due and P500.00 as
liquidated damages; that the instrument had
been registered in the Registry of Property and
Motor Vehicles Office, both of the province of
Tarlac.
ISSUE:
W/N the residential house, subject of the
mortgage therein, can be considered a Chattel
and the propriety of the attorney's fees.
HELD:
The court ruled "a property may have a
character different from that imputed to it in
said articles. It is undeniable that the parties to
a contract may by agreement, treat as
personal property that which by nature would
be real property" (Standard Oil Co. of N.Y. v.
Jaranillo, 44 Phil. 632-633)."There can not be
any question that a building of mixed materials
may be the subject of a chattel mortgage, in
which case, it is considered as between the
parties as personal property. ... The matter
depends on the circumstances and the
intention of the parties". "Personal property
may retain its character as such where it is so
agreed by the parties interested even though
annexed to the realty ...". (42 Am. Jur. 209-
210, cited in Manarang, et al. v. Ofilada, et al.,
G.R. No. L-8133, May 18, 1956; 52 O.G. No. 8,
p. 3954.) Moreover, the court continues and
makes plain that it "is good only insofar as the
contracting parties are concerned. It is based
partly, upon the principles of estoppel ..."
(Evangelista v. Alto Surety, No. L-11139, Apr.
23, 1958). WHEREBY, previous judgment is
hereby AFFIRMED costs against appelant.
MLAV
Manila Electric Co., v. Central Board of
Assessment Appeals
114 SCRA 273
DOCTRINE:Oil storage tanks were held to be
taxable realty. For purposes of taxation, the
term "real property" may include things which
should generally be regarded as personal
property.
FACTS:
The case is about the imposition of the realty
tax on two oil storage tanks installed in 1969 by
Manila Electric Company in Batangas which it
leased in 1968 from Caltex (Phil.), Inc. The
tanks are within the Caltex refinery compound,
and are used for storing fuel oil for Meralco's
power plants.
According to Meralco, the storage tanks are
made of steel plates welded and assembled on
the spot. Their bottoms rest on a foundation
consisting of compacted earth as the
outermost layer, a sand pad as the
intermediate layer and a two-inch thick
bituminous asphalt stratum as the top layer.
The bottom of each tank is in contact with the
asphalt layer. Hence, it is not attached to its
foundation.
On the other hand, according to the hearing
commissioners of the Central Board of
Assessment Appeals (CBAA) states that while
the tanks rest or sit on their foundation, the
foundation itself and the walls, dikes and steps,
which are integral parts of the tanks, are
affixed to the land while the pipelines are
attached to the tanks.
The CBAA ruled that the tanks together with
the foundation, walls, dikes, steps, pipelines
and other appurtenances constitute taxable
improvements.
Meralco filed a motion for reconsideration
which the Board denied. They elevated the
case to the SC.
ISSUE:
WON the storage tanks are considered
“improvements” on real property such that it is
subject to real property tax. -- YES
HELD:
Meralco contends that the said oil storage
tanks do not fall within any of the kinds of real
property enumerated in article 415 of the Civil
Code and, therefore, they cannot be
categorized as realty by nature, by
incorporation, by destination nor by analogy.
Stress is laid on the fact that the tanks are not
attached to the land and that they were placed
on leased land, not on the land owned by
Meralco.
The issue raised by Meralco has to be resolved
in the light of the provisions of the Assessment
Law, Commonwealth Act No. 470, and the
Real Property Tax Code, Presidential Decree
No. 464 which took effect on June 1, 1974.
Section 2 of the Assessment Law provides that
the realty tax is due "on real property, including
land, buildings, machinery, and other
improvements" not specifically exempted in
section 3 thereof. This provision is reproduced
with some modification in the Real Property
Tax Code which provides:
Sec. 38. Incidence of Real Property
Tax. — They shall be levied, assessed
and collected in all provinces, cities and
municipalities an annual ad valorem tax
on real property, such as land,
buildings, machinery and other
improvements affixed or attached to real
property not hereinafter specifically
exempted.
The Code contains the following definition in its
section 3:
k) Improvements — is a valuable
addition made to property or an
amelioration in its condition, amounting
to more than mere repairs or
replacement of waste, costing labor or
capital and intended to enhance its
value, beauty or utility or to adapt it for
new or further purposes.
The SC holds that while the two storage tanks
are not embedded in the land, they may,
nevertheless, be considered as improvements
on the land, enhancing its utility and rendering
it useful to the oil industry. It is undeniable that
the two tanks have been installed with some
degree of permanence as receptacles for the
considerable quantities of oil needed by
Meralco for its operations.
Oil storage tanks were held to be taxable realty
in Standard Oil Co. of New Jersey vs. Atlantic
City, 15 Atl. 2nd 271.
For purposes of taxation, the term "real
property" may include things which should
generally be regarded as personal property. It
is a familiar phenomenon to see things classed
as real property for purposes of taxation which
on general principle might be considered
personal property (Standard Oil Co. of New
York vs. Jaramillo, 44 Phil. 630, 633).
DJTV
Caltex Philippines v. Central Board of
Assessment Appeals
114 SCRA 296
DOCTRINE: Gasoline station equipment and
machineries are permanent fixtures for
purposes of realty taxation.
FACTS:
Machines and equipment are loaned by Caltex
to gas station operators under an appropriate
lease agreement or receipt. It is stipulated in
the lease contract that the operators, upon
demand, shall return to Caltex the machines
and equipment in good condition as when
received, ordinary wear and tear excepted.
The city assessor of Pasay City characterized
the said items of gas station equipment and
machinery as taxable realty. The city board of
tax appeals ruled that they are personalty. The
assessor appealed to the Central Board of
Assessment Appeals.
The Board said machines and equipment are
real property within the meaning of sections
3(k) & (m) and 38 of the Real Property Tax
Code, Presidential Decree No. 464, which took
effect on June 1, 1974, and that the definitions
of real property and personal property in
articles 415 and 416 of the Civil Code are not
applicable to this case.
Caltex filed this certiorari petition wherein it
prayed for the setting aside of the Board's
decision and for a declaration that t he said
machines and equipment are personal property
not subject to realty tax.
ISSUE:
Whether or not Gasoline station equipment and
machineries are permanent fixtures for
purposes of realty taxation. -- YES
HELD:
The Supreme Court held that gasoline station
equipment and machineries are permanent
fixtures for purposes of realty taxation. Thus,
they are subject to the real property tax. The
said equipment and machinery, as
appurtenances to the gas station building or
shed owned by Caltex (as to which it is subject
to realty tax) and which fixtures are necessary
to the operation of the gas station, for without
them the gas station would be useless, and
which have been attached or affixed
permanently to the gas station site or
embedded therein, are taxable improvements
and machinery within the meaning of the
Assessment Law and the Real Property Tax
Code.
The Central Board of Assessment Appeals did
not commit a grave abuse of discretion in
upholding the city assessor's is imposition of
the realty tax on Caltex's gas station and
equipment.
WHEREFORE, the questioned decision and
resolution of the Central Board of Assessment
Appeals are affirmed. The petition for certiorari
is dismissed for lack of merit.
JGY
Phil. Refining Co., Inc. v. Jarque
G.R. No. 41506
DOCTRINE: Vessels are considered personal
property under the civil law. Similarly under the
common law, vessels are personal property
although occasionally referred to as a peculiar
kind of personal property. Since the term
"personal property" includes vessels, they are
subject to mortgage agreeably to the
provisions of the Chattel Mortgage Law.
FACTS:
Philippine Refining Co., Inc., and Jarque
executed three chattel mortgages on the motor
vessels Pandan and Zaragoza. Neither of the
first two mortgages had appended an affidavit
of good faith. The third mortgage contained
such an affidavit, but this mortgage was not
registered in the customs house within the
period of thirty days prior to the
commencement of insolvency proceedings
against Jarque. A fourth mortgage was
executed and was entered in the chattel
mortgage registry of the register of deeds
within the thirty-day period before the institution
of insolvency proceedings. CFI declared
Jarque to be an insolvent debtor. As a result,
all his properties were assigned to Corominas.
CFI Judge declined to order the foreclosure of
the mortgages, but on the contrary sustained
the special defenses of fatal defectiveness of
the mortgages.
ISSUES:
1. WON the vessels are considered as
personal property and can be the
subject of Chattel Mortgage. Yes
2. WON the Chattel Mortgages are valid.
No.
HELD:
Vessels are considered personal property
under the civil law. Similarly under the common
law, vessels are personal property although
occasionally referred to as a peculiar kind of
personal property. Since the term "personal
property" includes vessels, they are subject to
mortgage agreeably to the provisions of the
Chattel Mortgage Law. Indeed, it has
heretofore been accepted without discussion
that a mortgage on a vessel is in nature a
chattel mortgage. The only difference between
a chattel mortgage of a vessel and a chattel
mortgage of other personalty is that it is not
now necessary for a chattel mortgage of a
vessel to be noted n the registry of the register
of deeds, but it is essential that a record of
documents affecting the title to a vessel be
entered in the record of the Collector of
Customs at the port of entry. Otherwise a
mortgage on a vessel is generally like other
chattel mortgages as to its requisites and
validity.

The Chattel Mortgage Law in its section 5, in
describing what shall be deemed sufficient to
constitute a good chattel mortgage, includes
the requirement of an affidavit of good faith
appended to the mortgage and recorded
therewith. The absence of the affidavit vitiates
a mortgage as against creditors and
subsequent encumbrancers. As a nearly identical with Article 1473 of the Civil
consequence a chattel mortgage of a vessel
wherein the affidavit of good faith required by
the Chattel Mortgage Law is lacking, is
unenforceable against third persons.
JRPA
Rubiso v. Rivera
37 Phil 72
DOCTRINE:The requisite of registration in the
registry, of the purchase of the vessel, is
necessary and indispensable in order that
the purchaser’s rights may be maintained
against a third person.
FACTS:
Rubiso filed a complaint against Rivera for the
recovery of a pilot boat. He alleged that he is
the rightful owner of a pilot boat, which
was stranded and recovered by Rivera. The
latter refused to return the said boat as he
alleged too that he was the owner thereof.
It was known that the original owners of the
boat had secretly sold the pilot boat to Rivera
on an earlier date than the sale in a public
auction to Rubiso. Nonetheless, material is the
fact that the entry into the customs registry of
the sale of the boat was later than the
recording of the sale to Rubiso.
ISSUE:
WON it is Rubiso or Rivera who has a better
right to the boat? -- Rubiso has a better right
HELD:
The requisite of registration in the registry, of
the purchase of the vessel, is necessary and
indispensable in order that the purchaser’s
rights may be maintained against a third
person. Such registration is required
both by the Code of Commerce and Act 1900.
It is undeniable, ergo, that Rivera doesn’t have
a better right than Rubiso over the pilot boat.
Ships and vessels, whether moved by
steam or by sail, partake, to a certain
extent of the nature and conditions of real
property, on account of their value and
importance in world commerce; and for this,
the provisions of the Code of Commerce are
Code
ABB
U.S. v. Carlos
21 Phil. 553
DOCTRINE: The true test of what constitutes
the proper subject of [theft] is not whether the
subject is corporeal or incorporeal, but whether
it is capable of appropriation by another other
than the owner.
FACTS:
Ignacio Carlos has been a consumer of
electricity furnished by MERALCO for a
building containing the residence of the
accused and 3 other residences.
Representatives of the company believing that
more light is consumed than what is shown in
the meter installed an additional meter on the
pole outside Carlos’ house to compare the
actual consumption and found out that a
jumper was used to manipulate the readings of
the first meter. Further, a jumper was found in
a drawer of a small cabinet in the room of the
defendant’s house where the meter was
installed. In the absence of any explanation for
Carlos’ possession of said device, the
presumption raised was that Carlos was the
owner of the device whose only use was to
deflect the current from the meter. Thus, he
was charged with the crime of theft amounting
to 2,273KW of electric power worth 909.20
pesos.
Carlos claimed that what he did failed to
constitute an offense because the crime of
theft applies only to tangibles, chattels and
objects that can be taken into possession.
Deliberation quickly followed at the court which
subsequently sentenced him to over a year in
jail. Carlos contested saying that electrical
energy can’t be stolen because of its nature of
being incorporeal. He filed an appeal on such
grounds which the CFI affirmed.
ISSUE:
Whether or not theft can be committed against
an intangible such as electricity. -- YES
HELD:
Theft of incorporeal objects is possible. The
right of ownership of electrical current was
secured by Art 517 and 518 of the Penal Code
which applies to gas.
Analogically, electricity can be considered as
‘gas’ which can be stolen. However, the true
test of what constitutes the proper subject of
larceny is not whether the subject is corporeal
or incorporeal, but whether it is capable of
appropriation by another other than the owner.
It is a valuable article of merchandise, a force
of nature brought under the control of science
(under Art. 416 of the New Civil Code). Carlos
secretly and with intent to deprive the company
of its rightful property, used jumper cables to
appropriate the same for his own use. Such
acts constitute theft.
FZC
Piansay v. David
12 SCRA 227
DOCTRINE: regardless of the validity of a
contract constituting a chattel mortgage on a
house, the same cannot and does not bind
third persons, who are not parties to the
contract of their privies.
FACTS:
David obtained a loan from Uy Kim secured
with a chattel mortgage on a house in Tondo.
David failed to pay, thus was Kim foreclosed.
Kim then bought the house at the resulting
public auction. Thereafter, Kim sold the same
to Marcos Mangubat, who later filed a
complaint against David for the collection of a
portrion of the loan. The complaint was later
amended to implead Uy Kim and Piansay
praying that the auction sale and deed of
absolute sale executed by Uy Kim in favor of
Piansay be annulled. CFI Manila ordered David
to pay and annulled the chattel mortgage. CA
affirmed. David was ordered to pay and the
house was levied upon. To prevent the sale at
the public auction, Piansay and Uy Kim filed a
petition for
certiorari and mandamus with preliminary
injunction before the CA; it was denied.
Subsequently, Piansay and Uy Kim instituted
an action against David and Mangubat praying
that judgment be rendered declaring Piansay
as the true owner and restrain the levy and
sale to public auction. David demanded from
Piansay the payment of the rentals for the use
and occupation of the house; the latter claims it
is his property. Mangubat, on one hand, moved
to dismiss the complaint on the ground of res
adjudicata and lackof personality to sue; it was
granted. CA affirmed explaining that Uy Kim
had no right to foreclose the chattel mortgage
because it was in reality a mere contract of an
unsecured loan. Piansay assailed Mangubat's
right to levy execution upon the house alleging
that the same belongs to him, he having
bought it from Uy Kim who acquired it at the
auction sale.
ISSUE:
WON the chattel mortgage and sale are valid -
NO
HELD:
Upon the theory that the chattel mortgage and
sale in favor of Uy Kim had been annulled in
the original decision, as affirmed by the CA, the
fact is that said order became final and
executory upon the denial of the petition for
certiorari and mandamus. Hence, Uy Kim and
Piansay are now barred from asserting that the
chattel mortgage and sale are valid. At any
rate, regardless of the validity of a contract
constituting a chattel mortgage on a house, as
between the parties to said contract, the same
cannot and does not bind third persons, who
are not parties to the contract of their privies.
As a consequence, the sale of the house in
question in the proceedings for the
extrajudicialforeclosure of said chattel
mortgage, is null and void insofar as defendant
Mangubat is concerned, anddid not confer
upon Uy Kim, as buyer in said sale, any
dominical right in and to said house, so that
shecould not have transmitted to her assignee
Piansay any such right as against Mangubat.
In short, they donot have a cause of action
against Mangubat and David
LNAC
U.S. v. Tambunting
41 Phil 364
DOCTRINE: There is nothing in the nature of
gas used for illuminating purposes which
renders it incapable of being feloniously taken
and carried away. It is a valuable article of
merchandise, bought and sold like other
personal property, susceptible of being
severed from a mass or larger quantity and of
being transported from place to place. Likewise
water which is confined in pipes and electricity
which is conveyed by wires are subjects of
larceny.
FACTS:
This appeal was instituted for the purpose of
reversing a judgment of the CFI, finding the
accused, Manuel Tambunting, guilty of stealing
a quantity of gas belonging to the Manila Gas
Corporation, and sentencing him to undergo
imprisonment with the accessories prescribed
by law; to indemnify the said corporation, with
subsidiary imprisonment in case of insolvency;
and to pay the costs.
The evidence submitted in behalf of the
prosecution shows that in January of the year
1918, the accused and his wife became
occupants of the upper floor of the house
situated at No. 443, Calle Evangelista, Manila.
In this house the Manila Gas Corporation had
previously installed apparatus for the delivery
of gas on both the upper and lower floors,
consisting of the necessary piping and a gas
meter, which last mentioned apparatus was
installed below. When the occupants at whose
request this installation had been made
vacated the premises, the gas company
disconnected the gas pipe and removed the
meter, thus cutting off the supply of gas from
said premises.
Upon June 2, 1919, one of the inspectors of
the gas company visited the house in question
and found that gas was being used, without the
knowledge and consent of the gas company,
for cooking in the quarters occupied by the
defendant and his wife: to effect which a short
piece of iron pipe had been inserted in the gap
where the gas meter had formerly been placed,
and piece of rubber tubing had been used to
connect the gas pipe of rubber tubing had been
used to connect the gas pipe in kitchen with
the gas stove, or plate, used for cooking.
At the time this discovery was made, accused
Tambunting was not at home. However, he
presently arrived and admitted to the agent to
the gas company that he had made the
connection with the rubber tubing between the
gas pipe and the stove, though he denied
making the connection below. He also admitted
that he knew he was using gas without the
knowledge of the company and that he had
been so using it for probably two or three
months.
The clandestine use of gas by the accused in
the manner stated is thus established in our
opinion beyond a doubt; and inasmuch as the
animo lucrandi is obvious.
ISSUE:
Whether gas can be the subject to larceny. --
YES
HELD:.
The right of the ownership of electric current is
secured by article 517 and 518 of the Penal
Code; the application of these articles in cases
of subtraction of gas, a fluid used for lighting,
and in some respects resembling electricity, is
confirmed by the rule laid down in the
decisions of the SC of Spain, construing and
enforcing the provisions of articles 530 and 531
of the Penal Code of that country, articles
identical with articles 517 and 518 of the code
in force in these Islands. These expressions
were used in a case which involved the
subtraction and appropriation of electrical
energy and the court held, in accordance with
the analogy of the case involving the theft of
gas, that electrical energy could also be the
subject of theft.
In this connection it will suffice to quote the
following from the topic "Larceny," at page 34,
Vol. 17, of Ruling Case Law: There is nothing
in the nature of gas used for illuminating
purposes which renders it incapable of being
feloniously taken and carried away. It is a
valuable article of merchandise, bought and
sold like other personal property, susceptible of
being severed from a mass or larger quantity
and of being transported from place to place.
Likewise water which is confined in pipes and
electricity which is conveyed by wires are
subjects of larceny.
TKDC
Involuntary Insolvency of Strochecker v.
Ramirez
44 Phil. 933
DOCTRINE: All personal properties may be
mortgaged. Interest in business is personal
property capable of appropriation and not
included in the enumeration of real properties
under Article 335 of the Civil Code. Thus,
interest in business may be subject of
mortgage.
FACTS:
Three mortgages seek preference in the lower
court: one in favor of Fidelity and Surety Co.,
another in favor of Ramirez, and the last one in
favor of Ayala. Ayala’s claim was rejected by
trial court from which she didn’t appeal.
As to the time of the mortgages, the one in
favor of Fidelity and Surety Co. is preferred
because it was executed and registered in the
registry of property prior to that of Ramirez’s.
However, Ramirez claimed that the mortgage
in favor of Fidelity and Surety Co. is invalid
because the property, the half interest in the
drug business, is incapable of being
mortgaged. Trial court ruled that the mortgage
in favor of Fidelity and Surety Co. is entitled to
preference.
ISSUE:
Whether or not one-half interest in the
business is capable of being mortgaged. --
YES
HELD:
All personal properties may be mortgaged.
Interest in business is personal property
capable of appropriation and not included in
the enumeration of real properties under Article
335 of the Civil Code. Thus, interest in
business may be subject of mortgage.
In this case, the mortgaged property of one-
half interest in the drug business in favor of
Fidelity and Surety Co. is a valid subject of
mortgage.
AMD
Laurel v. Abrogar
G.R. No. 155076
DOCTRINE: Telecommunication services and
the business of providing said services are not
personal properties and cannot be subject to
Article 308 of the Revised Penal Code
Services in business, although properties, are
not proper subjects of theft under the Revised
Penal Code because the same cannot be
"taken" or "occupied".
FACTS:
PLDT claims that Luis Marcos P. Laurel, board
member and corporate secretary of Baynet
Co., Ltd., stole and used the international long
distance calls belonging to PLDT by
conducting International Simple Resale (ISR) –
a method of routing and completing
international long distance calls using lines,
cables, antennae, and/or air wave frequency
which connect directly to the local or domestic
exchange facilities of the country where the call
is destined. PLDT alleged that such business
was effectively stolen while using their facilities
leading to great damage and prejudice
amounting to P20,370,651.92.
Laurel however alleged that the allegations do
not constitue the felony of theft under Article
308 of the RPC or any special law. He claimed
that, telephone calls with the use of PLDT
telephone lines, whether domestic or
international, belong to the persons making the
call, not to PLDT. He argued that the caller
merely uses the facilities of PLDT, and what
the latter owns are the telecommunication
infrastructures or facilities through which the
call is made. He also asserted that PLDT is
compensated for the caller’s use of its facilities
by way of rental; for an outgoing overseas call,
PLDT charges the caller per minute, based on
the duration of the call. Thus, no personal
property was stolen from PLDT.
The prosecution asserted that the use of
PLDT’s intangible telephone services/facilities
allows electronic voice signals to pass through
the same, and ultimately to the called party’s
number. It averred that such service/facility is
akin to electricity which, although an intangible
property, may, nevertheless, be appropriated
and be the subject of theft. The prosecution
further alleged that "international business calls
and revenues constitute personal property
envisaged in Article 308 of the Revised Penal
Code." Moreover, the intangible telephone
services/facilities belong to PLDT and not to
the movant and the other accused, because
they have no telephone services and facilities
of their own duly authorized by the NTC; thus,
the taking by the movant and his co-accused of
PLDT services was with intent to gain and
without the latter’s consent.
ISSUE:
W/N telephone calls placed by Bay Super
Orient Card holders through the
telecommunication services provided by PLDT
are considered as personal property, and thus,
proper subjects of theft under Article 308 of the
Revised Penal Code. -- NO
HELD:
The court finds that the international telephone
calls placed by Bay Super Orient Card holders,
the telecommunication services provided by
PLDT and its business of providing said
services are not personal properties under
Article 308 of the Revised Penal Code. The
rule is that, penal laws are to be construed
strictly. Penal statutes may not be enlarged by
implication or intent beyond the fair meaning of
the language used; and may not be held to
include offenses other than those which are
clearly described.
One is apt to conclude that "personal property"
standing alone, covers both tangible and
intangible properties and are subject of theft
under the Revised Penal Code. But the words
"Personal property" under the Revised Penal
Code must be considered in tandem with the
word "take" in the law. The statutory definition
of "taking" and movable property indicates that,
clearly, not all personal properties may be the
proper subjects of theft. The general rule is
that, only movable properties which have
physical or material existence and susceptible
of occupation by another are proper objects of
theft.
According to Cuello Callon, in the context of
the Penal Code, only those movable properties
which can be taken and carried from the place
they are found are proper subjects of theft.
Intangible properties such as rights and ideas
are not subject of theft because the same
cannot be "taken" from the place it is found and
is occupied or appropriated.
Gas and electrical energy should not be
equated with business or services provided by
business entrepreneurs to the public. Business
does not have an exact definition. Business is
referred as that which occupies the time,
attention and labor of men for the purpose of
livelihood or profit. It embraces everything that
which a person can be employed. Business
may also mean employment, occupation or
profession. Business is also defined as a
commercial activity for gain benefit or
advantage. Business, like services in business,
although are properties, are not proper
subjects of theft under the Revised Penal Code
because the same cannot be "taken" or
"occupied."
PLDT does not acquire possession, much less,
ownership of the voices of the telephone
callers or of the electronic voice signals or
current emanating from said calls. The human
voice and the electronic voice signals or
current caused thereby are intangible and not
susceptible of possession, occupation or
appropriation by PLDT or even the petitioner,
for that matter. PLDT merely transmits the
electronic voice signals through its facilities
and equipment. Baynet Card Ltd., through its
operator, merely intercepts, reroutes the calls
and passes them to its toll center.