DAVAO SAW MILL vs. APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC. G.R. No.

L-40411 August 7, 1935

Facts:
Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine
Islands. However, the land upon which the business was conducted belonged to another person. On the
land the sawmill company erected a building which housed the machinery used by it. Some of the
implements thus used were clearly personal property, the conflict concerning machines which were
placed and mounted on foundations of cement. In the contract of lease between the sawmill company
and the owner of the land there appeared the following provision: That on the expiration of the period
agreed upon, all the improvements and buildings introduced and erected by the party of the second part
shall pass to the exclusive ownership of the lessor without any obligation on its part to pay any amount for
said improvements and buildings; which do not include the machineries and accessories in the
improvements.

In another action wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill
Co., Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action against the
defendant; a writ of execution issued thereon, and the properties now in question were levied upon as
personalty by the sheriff. No third party claim was filed for such properties at the time of the sales thereof
as is borne out by the record made by the plaintiff herein

It must be noted also that on number of occasion, Davao Sawmill treated the machinery as personal
property by executing chattel mortgages in favor of third persons. One of such is the appellee by
assignment from the original mortgages.

The lower court rendered decision in favor of the defendants herein. Hence, this instant appeal.

Issue:
whether or not the machineries and equipments were personal in nature.

Ruling/ Rationale:
Yes. The Supreme Court affirmed the decision of the lower court.

Machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner
of the property or plant, but not when so placed by a tenant, a usufructuary, or any person having only a
temporary right, unless such person acted as the agent of the owner.
 LEUNG YEE, plaintiff-appellant,
vs.
FRANK L. STRONG MACHINERY COMPANY and J. G. WILLIAMSON, defendants-appellees.
G.R. No. L-11658 February 15, 1918

Facts:
Leung Yee’s company bought cleaning equipment from the defendant machinery company. As payment, it
executed a chattel mortgage in favour of the defendant on its building in which the machinery was
installed. This mortgage made no reference as to the land from where the property was located. Since the
plaintiff’s company, was not able to pay, the building together with the equipment attached to it was
foreclosed and the respondent was able to possess the property. Hence, this action by the plaintiff to
recover possession of the building.

Issue: Whether or not the building can be classified as a real property, so as to subject it to a real estate
mortgage

Held:
The disputed building was considered by the court as Real property.
The mere fact that the parties seem to have dealt with it separately and apart from the land would change
its character as real property. Hence, such mortgage would still be a real estate mortgage for the building
that served as a security and the executed chattel mortgage and its consequences cannot be said to
have any legal effect

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

GR No. L-58469
Property Law: Immovable Property

Facts:
In order to obtain financial accommodations from petitioner Makati Leasing and Finance Corporation, the
private respondent Wearever Textile Mills, Inc., discounted and assigned several receivables with the
former under a Receivable Purchase Agreement. To secure the collection of the receivables assigned,
private respondent executed a Chattel Mortgage over certain raw materials inventory as well as
machinery described as an Artos Aero Dryer Stentering Range.

Upon default, petitioner filed a petition for extrajudicial foreclosure of the properties mortgage to it. Acting
on petitioner’s application for replevin, the lower court issued a writ of seizure. Then after, the sheriff
enforcing the seizure order repaired to the premises of private respondent and removed the main drive
motor of the subject machinery.
The Court of Appeals, in certiorari and prohibition proceedings ordered the return of the seized drive
motor, 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 enforce the writ was
to take the main drive motor of said machinery.

Issue:
Whether the seized drive motor cannot be a subject of chattel mortgage, because it is a real property
pursuant to Article 415 of the new Civil Code

Held:
No. The seized drive motor can be a subject of chattel mortgage.

Examining the records of the instance case, the Supreme Court found no logical justification to exclude
and rule out, as the appellate court did, the present case from the application of the pronouncement in the
TUMALAD v. VICENCIO CASE (41 SCRA 143) where a similar, if not identical issue was raised. If a
house of strong materials, like what was involved in the Tumalad case may be considered as personal
property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so
agree and no innocent third party will be prejudiced thereby, there is absolutely no reason why a
machinery, which is movable in its nature and becomes immobilized only by destination or purpose, may
not be likewise treated as such. This is really because one who has so agreed is estopped from 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.

Private respondent contends that estoppel cannot apply against it because it had never represented nor
agreed that the machinery in suit be considered as personal property but was merely required and
dictated on by herein petitioner to sign a printed form of chattel mortgage which was in a blank form at the
time of signing. This contention lacks persuasiveness. As aptly pointed out by petitioner and not denied by
the respondent, the status of the subject machinery as movable or immovable was never placed in issue
before the lower court and the Court of Appeals except in a supplemental memorandum in support of the
petition filed in the appellate court.
Serg's v. PCI Leasing

Serg’s Products, Inc. vs. PCI Leasing G.R. No. 137705. August 22, 2000

FACTS:

• PCI Leasing and Finance filed a complaint for sum of money, with an application for a
writ of replevin. 

• Judge issued a writ of replevin directing its sheriff to seize and deliver the machineries
and equipment to PCI Leasing after 5 days and upon the payment of the necessary
expenses. 

• The sheriff proceeded to petitioner's factory, seized one machinery, with word that he
would return for other machineries. 

• Petitioner (Serg’s Products) filed a motion for special protective order to defer
enforcement of the writ of replevin. 

• PCI Leasing opposed the motion on the ground that the properties were still personal
and therefore can still be subjected to seizure and writ of replevin. 

• Petitioner asserted that properties sought to be seized were immovable as defined in

Article 415 of the Civil Code. 

• Sheriff was still able to take possession of two more machineries 

In its decision on the original action for certiorari filed by the Petitioner, the appellate court,
Citing the Agreement of the parties, held that the subject machines were personal property,
and that they had only been leased, not owned, by petitioners; and ruled that the "words of the
contract are clear and leave no doubt upon the true intention of the contracting parties."

ISSUE: Whether or not the machineries became real property by virtue of immobilization.

Ruling:

Petitioners contend that the subject machines used in their factory were not proper subjects of
the Writ issued by the RTC, because they were in fact real property.

Writ of Replevin: Rule 60 of the Rules of Court provides that writs of replevin are issued for the
recovery of personal property only.

Article 415 (5) of the Civil Code provides that machinery, receptacles, instruments or
implements intended by the owner of the tenement for an industry or works which may be
carried on in a building or on a piece of land, and which tend directly to meet the needs of the
said industry or works

In the present case, the machines that were the subjects of the Writ of Seizure were placed by
petitioners in the factory built on their own land.They were essential and principal elements of
their chocolate-making industry.Hence, although each of them was movable or personal
property on its own, all of them have become “immobilized by destination because they are
essential and principal elements in the industry.”

However, contracting parties may validly stipulate that a real property be considered as
personal. After agreeing to such stipulation, they are consequently estopped from claiming
otherwise.Under the principle of estoppel, a party to a contract is ordinarily precluded from
denying the truth of any material fact found therein.

Section 12.1 of the Agreement between the parties provides “The PROPERTY is, and shall at
all times be and remain, personal property notwithstanding that the PROPERTY or any part
thereof may now be, or hereafter become, in any manner affixed or attached to or embedded
in, or permanently resting upon, real property or any building thereon, or attached in any
manner to what is permanent.”

The machines are personal property and they are proper subjects of the Writ of Replevin

LUIS MARCOS P. LAUREL vs HON. ZEUS C. ABROGAR

G.R. No. 155076
January 13, 2009

FACTS:

Luis Laurel (Laurel) was charged willfully, unlawfully and feloniously take, steal and use the international
long distance calls belonging to PLDT by conducting International Simple Resale (ISR), which is a
method of routing and completing international long distance calls using lines, cables, antenae, and/or air
wave frequency which connect directly to the local or domestic exchange facilities of the country where
the call is destined, effectively stealing this business from PLDT while using its facilities.

PLDT claimed such the “international phone calls” which are “electric currents or sets of electric impulses
transmitted through a medium, and carry a pattern representing the human voice to a receiver,” are
personal properties under Art. 416(3) Forces of nature which are brought under control by science

Laurel claims that the telephone conversation is not synonymous to electric current or impulses hence it
is not susceptible of appropriation, thus cannot be considered a personal property.

ISSUE:

Is Laurel Guilty of Theft of Personal Property?

RULING:

The only requirement for a personal property to be the object of theft under the Penal Code is that it be
capable of appropriation. The act of conducting International Simple Resale (ISR) operations by illegally
connecting various equipment or apparatus to private respondent Philippine Long Distance Telephone’s
(PLDT’s) telephone system, through which petitioner is able to resell or re-route international long
distance calls using respondent Philippine Long Distance Telephone’s (PLDT’s) facilities constitutes all
three acts of subtraction.
Article 414 of the Civil Code provides that all things which are or may be the object of appropriation are
considered either real property or personal property. Though Business is likewise not enumerated as
personal property under the Civil Code. Just like interest in business, however, it may be appropriated.
Following the ruling in Strochecker v. Ramirez, 44 Phil.933 (1922), business should also be classified as
personal property. Since the Business of providing telecommunication service is not included in the
exclusive enumeration of real properties under Article 415, it is therefore personal property.
MANILA INTERNATIONAL AIRPORT AUTHORITY, Petitioner,
CITY OF PASAY, SANGGUNIANG PANGLUNGSOD NG PASAY, CITY MAYOR OF PASAY, CITY
TREASURER OF PASAY, and CITY ASSESSOR OF PASAY, Respondents.

Petitioner Manila International Airport Authority (MIAA) operates and administers the Ninoy Aquino
International Airport (NAIA) Complex under Executive Order No. 903 (EO 903), otherwise known as the
Revised Charter of the Manila International Airport Authority. EO 903 was issued on 21 July 1983 by then
President Ferdinand E. Marcos. Under Sections 3 and 22 of EO 903, approximately 600 hectares of land,
including the runways, the airport tower, and other airport buildings, were transferred to MIAA. The NAIA
Complex is located along the border between Pasay City and Parañaque City.

On 28 August 2001, MIAA received Final Notices of Real Property Tax Delinquency from the City of
Pasay for the taxable years 1992 to 2001. The City of Pasay, through its City Treasurer, issued notices of
levy and warrants of levy for the NAIA Pasay properties. MIAA received the notices and warrants of levy
on 28 August 2001.

Issue
Whether the NAIA Pasay properties of MIAA are exempt from real property tax.
Held:
In Manila International Airport Authority v. Court of Appeals (2006 MIAA case), this Court already
resolved the issue of whether the airport lands and buildings of MIAA are exempt from tax under existing
laws. The 2006 MIAA case originated from a petition for prohibition and injunction which MIAA filed with
the Court of Appeals, seeking to restrain the City of Parañaque from imposing real property tax on,
levying against, and auctioning for public sale the airport lands and buildings located in Parañaque City.
The only difference between the 2006 MIAA case and this case is that the 2006 MIAA case involved
airport lands and buildings located in Parañaque City while this case involved airport lands and buildings
located in Pasay City. The 2006 MIAA case and this case raised the same threshold issue: whether the
local government can impose real property tax on the airport lands, consisting mostly of the runways, as
well as the airport buildings, of MIAA. In the 2006 MIAA case, this Court held:
To summarize, MIAA is not a government-owned or controlled corporation under Section 2(13) of
the Introductory Provisions of the Administrative Code because it is not organized as a stock or non-stock
corporation. Neither is MIAA a government-owned or controlled corporation under Section 16, Article XII
of the 1987 Constitution because MIAA is not required to meet the test of economic viability. MIAA is a
government instrumentality vested with corporate powers and performing essential public services
pursuant to Section 2(10) of the Introductory Provisions of the Administrative Code. As a government
instrumentality, MIAA is not subject to any kind of tax by local governments under Section 133(o) of the
Local Government Code. The exception to the exemption in Section 234(a) does not apply to MIAA
because MIAA is not a taxable entity under the Local Government Code. Such exception applies only if
the beneficial use of real property owned by the Republic is given to a taxable entity.
ISSUE:
Whether or not the plaintiff-appellant has acquired a right of way over the land of the government which is
between his property and the ninoy aquino avenue.

RULING:
There has been no showing that a declassification has been made of the land in question as
disposable or alienable. And the record indeed disclosed that applicants have not introduced
any evidence which would have led the court a quo to rule otherwise.

Forest lands cannot be owned by private persons. Possession thereof, no matter how long doesn’t
ripen to a registrable title. The adverse possession which may be the basis of a grant or title or
confirmation of an imperfect title refers only to alienable or disposable portions of the public domain.