LOPEZ v.

OROSA

FACTS: Enrique Lopez is doing business under the trade name of Lopez-Castelo Sawmill. Vicente
Orosa, Jr. dropped at Lopez’ house and invited him to make an investment in the theatre
business. Although Lopez expressed his unwillingness to invest, he agreed to supply the lumber
necessary for the construction of the proposed theatre, and at Orosa's behest and assurance
that the latter would be personally liable for any account that the said construction might incur,
Lopez further agreed that payment therefor would be on demand and not cash on delivery
basis.

Lopez delivered the lumber which was used for the construction of the Plaza Theatre
amounting to P62,255.85, but Lopez was paid only P20,848.50, thus leaving a balance of
P41,771.35.
The land on which the building was built previously owned by Orosa, was later on acquired by
the corporation.
As Lopez was pressing Orosa for payment, the latter and president of the corporation promised
to obtain a bank loan by mortgaging the properties of the Plaza Theatre., out of which the
unpaid balance would be satisfied. But unknown to Lopez, the corporation already obtained a
loan with Luzon Surety Company as surety, and the corporation in turn executed a mortgage on
the land and building in favor of the said company as counter-security.

Persistent demand from Lopez for the payment of the amount due him caused Vicente Orosa,
Jr. to execute a deed of assignment of his 420 shares of stock of the Plaza Theater, Inc., at P100
per share or with a total value of P42,000 in favor of the creditor, and as the obligation still
remained unsettled, Lopez filed a complaint with the Court of First Instance of Batangas against
Vicente Orosa, Jr. and Plaza Theater, Inc., praying that defendants be sentenced to pay him
jointly and severally the sum of P41,771.35, with legal interest from the firing of the action; and
in case defendants fail to pay the same, that the building and the land owned by the
corporation be sold at public auction and the proceeds thereof be applied to said indebtedness;
or that the 420 shares of the capital stock of the Plaza Theatre, Inc., assigned by Vicente Orosa,
Jr., to said plaintiff be sold at public auction for the same purpose.
The lower court held that defendants were jointly liable for the unpaid balance and Lopez thus
acquired the material man’s lien over the construction. The lien was merely confined to the
building and did not extend to the on which the construction was made.
Lopez tried to secure a modification of the decision, but was denied.

ISSUE: whether a materialman's lien for the value of the materials used in the construction of a
building attaches to said structure alone and does not extend to the land on which the building
is adhered to

RULING:
ASSOCIATED INSURANCE and SURETY COMPANY, INC., vs. ISABEL IYA

FACTS: Adriano Valino and Lucia A. Valino were the owners of a house of strong materials in
Caloocan, Rizal, which they purchased on installment basis from the Philippine Realty
Corporation.

To enable her to purchase on credit rice from the NARIC, Lucia filed a bond in the sum of
P11,000.00 subscribed by the Associated Insurance and Surety Co., Inc., and as counter-
guaranty therefor, the spouses Valino executed an alleged chattel mortgage on the
aforementioned house in favor of the surety company. At the same time, the parcel of land
which the house was erected was registered in the name of Philippine Realty Corporation.

Having completed payment on the purchase price of the lot, the Valinos were able to secure a
certificate of title in their name however, the Valinos, to secure payment of an indebtedness in
the amount of P12,000.00, executed a real estate mortgage over the lot and the house in favor
of Isabel Iya.

Valino failed to satisfy her obligation to NARIC, so the surety company was compelled to pay
the same pursuant to the undertaking of the bond. In turn, surety company demanded
reimbursement from Valino, and as they failed to do so, the company foreclosed the chattel
mortgage over the house. As a result, public sale was conducted and the property was awarded
to the surety company.
The surety company then learned of the existence of the real estate mortgage over the lot and
the improvements thereon; thus, they prayed for the exclusion of the residential house from
the real estate mortgage and the declaration of its ownership in virtue of the award given
during bidding.
Iya alleged that she acquired a real right over the lot and the house constructed thereon, and
that the auction sale resulting from the foreclosure of chattel mortgage was null and void.
Surety company argued that as the lot on which the house was constructed did not belong to
the spouses at the time the chattel mortgage was executed, the house might be considered as
personal property, and they prayed that the said building be excluded from the real estate
mortgage.

ISSUE: controversy arise as to which of these encumbrances should receive preference over the
other.

RULING: The building is subject to the real estate mortgage, in favour of Iya. Iya’s right to
foreclose not only the land but also the building erected thereon is recognised.
While it is true that real estate connotes the land and the building constructed thereon, it is
obvious that the inclusion of the building, separate and distinct from the land, in the
enumeration of what may constitute real properties (Article 415), could only mean that a
building is by itself an immovable property. Moreover, in view of the absence of any 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.
A building certainly cannot be divested of its character of a realty by the fact that the land on
which it is constructed belongs to another.
In the case at bar, as personal properties could only be the subject of a chattel mortgage and as
obviously the structure in question is not one, the execution of the chattel mortgage covering
said building is clearly invalid and a nullity. While it is true that said document was
correspondingly registered in Chattel Mortgage Registry of Rizal, this act produced no effect
whatsoever, for where the interest conveyed is in the nature of real property, the registration
of the document in the registry of chattels is merely a futile act. Thus, the registration of the
chattel mortgage of a building of strong materials produced no effect as far as the building is
concerned.

bacerra v. tereza

facts:
Hodges entered into a contract promising to sell a lot to Ladera under certain terms and
conditions. One of which is that the contract may be rescinded and annulled in case Ladera
failed to make the monthly payment 60 days after it is due. After the execution of the contract,
Ladera built a house on the lot assessed at 4,500 pesos. However, Ladera failed to pay the
agreed installments so Hodges rescinded the contract and filed an action for ejectment. The
MTC ruled in favor of Hodges and issued an alias writ of execution. Pursuant thereto, the sheriff
levied upon all rights, interests and participation over the house. Notices of sale were posted,
however, were not published in a newspaper of general circulation. An auction sale was then
conducted but Ladera was not able to attend as she had gone to Manila. The house was then
sold to one Avelina Magno as the highest bidder. Meanwhile, Ladera sold the same lot to one
Manuel Villa and on the same day purchased the house from Magno for 200 pesos. This,
however, was not recorded. Ladera then returned to Iloilo and learned what happened. She
went to see the sheriff and represented that the property can still be redeemed and so she
gave him 230 pesos. It does not appear, however, that it was turned over to Hodges.
Thereupon, Ladera filed an action against Hodges, the sheriff, Magno and Villa to set aside the
sale and recover the house. The lower court ruled in favor of Ladera on the ground of non-
compliance based on Rule 39 of the Rules of Court. On appeal, Hodges contends that the house,
built on a lot owned by another, should be regarded as movable or personal property. The sale
of the land was also made without proper publication required by law.
ISSUE: Was the house movable or immovable?

RULING: Immovable.
1. As enumerated in the Civil Code, immovable property includes lands, buildings, roads and
constructions of all kinds adhered to the soil. The law does not make any distinction whether or
not the owner of the lot was the one who built the construction.
2. Also, Ladera did not declare his house to be a chattel mortgage. The object of the levy or sale
was real property and its publication in a newspaper of general circulation was indespensible.
Without it, the execution sale was void.
3. In addition, Magno, the alleged purchaser at the auction sale, was a mere employee of
Hodges and the low bid made by her as well as the fact that she sold the house to Villa on the
same day Hodges sold him the land, proves that she was merely acting for and in behalf of
Hodges.
4. In the sale of immovables, the lack of title of the vendor taints the rights of the subsequent
purchasers. Possession in good faith is not equivalent to title.
5. The principles of accession regard buildings and constructions as mere accessories to the
land on which it is built, it is logical that said accessories should partake the nature of the
principal thing.

Evangelista v. Alto Surety

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

SIBAL v. VALDEZ

FACTS: The 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. Included also in
those attached were real properties wherein 8mout of the 11 parcels of land, house and
camarin which was first acquired by Macondray & Co and then later on bought by Valdez in an
auction. First Cause for petitioner: 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. Second Cause for petitioner: That Valdez was trying to harvest palay from
four out of seven parcels of land. Petitioner filed for preliminary injunction to stop defendant
from 1) distributing the lands 2) harvesting and selling the sugar canes, and 3) harvesting and
selling the palay. The writ was issued which prevented defendant from planting and harvesting
the lands. Defendant later appealed claiming that he was the owner of many of the alleged land
thus he also owns the crops of it. The court awarded the defendant 9,439.08 because the
petitioner unduly denied the defendant to plant in his land thus preventing him to profit
thereto.
ISSUE:
Whether the sugar cane is personal o real property?
RULING:
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." That article,
however, has received in recent years an interpretation by the Tribunal Supremo de España,
which holds that, under certain conditions, growing crops may be considered as personal
property.
In some cases "standing crops" may be considered and dealt with as personal property. In the
case of Lumber Co. vs. Sheriff and Tax Collector (106 La., 418) the Supreme Court said: "True, by
article 465 of the Civil Code it is provided that 'standing crops and the fruits of trees not
gathered and trees before they are cut down . . . are considered as part of the land to which
they are attached, but the immovability provided for is only one in abstracto and without
reference to rights on or to the crop acquired by others than the owners of the property to
which the crop is attached. . . . The existence of a right on the growing crop is a mobilization by
anticipation, a gathering as it were in advance, rendering the crop movable quoad the right
acquired therein. Our jurisprudence recognizes the possible mobilization of the growing crop."
For the purpose of attachment and execution, and for the purposes of the Chattel Mortgage
Law, "ungathered products" have the nature of personal property. SC lowered the award for
damages to the defendant to 8,900.80 by acknowledging the fact that some of the sugar canes
were owned by the petitioner and by reducing the calculated expected yield or profit that
defendant would have made if petitioner did not judicially prevent him from planting and
harvesting his lands.

Tsai v. Court of Appeals

G.R. No. 120098 October 2, 2001

Facts: Ever Textile Mills, Inc. (EVERTEX) obtained a loan from petitioner Philippine Bank of
Communications (PBCom). As security for the loan, EVERTEX executed in favor of PBCom, a
deed of Real and Chattel Mortgage over the lot where its factory stands, and the chattels
located therein as enumerated in a schedule attached to the mortgage contract. PBCom
granted a second loan to EVERTEX. The loan was secured by a Chattel Mortgage over personal
properties enumerated in a list attached thereto. The listed properties were similar to those
listed in the first mortgage deed. Due to business reverses, EVERTEX filed insolvency
proceedings docketed. The CFI issued an order on declaring the corporation insolvent. All its
assets were taken into the custody of the Insolvency Court, including the collateral, real and
personal, securing the two mortgages as abovementioned.

Upon EVERTEX’s failure to meet its obligation to PBCom, the latter commenced extrajudicial
foreclosure proceedings against EVERTEX. PBCom was the highest bidder. Thus, PBCom
consolidated its ownership over the lot and all the properties in it and leased the entire factory
premises to petitioner Ruby L. Tsai. PBCom sold the factory, lock, stock and barrel to Tsai,
including the contested machineries. EVERTEX filed a complaint for annulment of sale,
reconveyance, and damages with the Regional Trial Court against PBCom, alleging inter alia that
the extrajudicial foreclosure of subject mortgage was in violation of the Insolvency Law.
EVERTEX claimed that no rights having been transmitted to PBCom over the assets of insolvent
EVERTEX, therefore Tsai acquired no rights over such assets sold to her, and should reconvey
the assets. EVERTEX averred that PBCom, without any legal or factual basis, appropriated the
contested properties, which were not included in the Real and Chattel Mortgages.

Issue: Whether or not the foreclosure on after acquired properties of EVERTEX is valid.

Held: Inasmuch as the subject mortgages were intended by the parties to involve chattels,
insofar as equipment and machinery were concerned, the Chattel Mortgage Law applies, which
provides in Section 7 thereof that: “a chattel mortgage shall be deemed to cover only the
property described therein and not like or substituted property thereafter acquired by the
mortgagor and placed in the same depository as the property originally mortgaged, anything in
the mortgage to the contrary notwithstanding.” And, since the disputed machineries were
acquired in 1981 and could not have been involved in the 1975 or 1979 chattel mortgages, it
was consequently an error on the part of the Sheriff to include subject machineries with the
properties enumerated in said chattel mortgages. As the auction sale of the subject properties
to PBCom is void, no valid title passed in its favor. Consequently, the sale thereof to Tsai is also
a nullity under the elementary principle of nemo dat quod non habet, one cannot give what
one does not have

Assuming arguendo that the properties in question are immovable by nature, nothing detracts
the parties from treating it as chattels to secure an obligation under the principle of estoppel.
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.

FELS ENERGY, INC. V THE PROVINCE OF BATANGAS and THE OFFICE OF THE PROVINCIAL
ASSESSOR OF BATANGAS
G.R. No. 168557 February 16, 2007

FACTS
Two consolidated cases were filed by FELS Energy, Inc. (FELS) and National Power Corporation
(NPC), respectively.

NPC entered into a lease contract with Polar Energy, Inc. over diesel engine power barges
moored at Batangas. The contract, denominated as an Energy Conversion Agreement, was for a
period of five years wherein, NPC shall be responsible for the payment of:
(a) all taxes, import duties, fees, charges and other levies imposed by the National Government
(b) all real estate taxes and assessments, rates and other charges in respect of the Power
Barges

Subsequently, Polar Energy, Inc. assigned its rights under the Agreement to FELS. Thereafter,
FELS received an assessment of real property taxes on the power barges. The assessed tax,
which likewise covered those due for 1994, amounted to P56,184,088.40 per annum. 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 sought reconsideration of the Provincial Assessor’s decision to assess real property taxes
on the power barges. However, the motion was denied. The Local Board of Assessment Appeals
(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.

FELS appealed the LBAA’s ruling to the Central Board of Assessment Appeals (CBAA). The CBAA
rendered a Decision finding the power barges exempt from real property tax.

It was later reversed by the cbaa upon reconsideration and affirmed by the CA

ISSUE
Whether power barges, which are floating and movable, are personal properties and therefore,
not subject to real property tax.

RULING
No. Article 415 (9) of the New Civil Code provides that "[d]ocks 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.
The findings of the LBAA and CBAA that the owner of the taxable properties is petitioner FELS is
the entity being taxed by the local government. As stipulated under the Agreement:
OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all the fixtures,
fittings, machinery and equipment on the Site used in connection with the Power Barges which
have been supplied by it at its own cost. POLAR shall operate, manage and maintain the Power
Barges for the purpose of converting Fuel of NAPOCOR into electricity.
It follows then that FELS cannot escape liability from the payment of realty taxes by invoking its
exemption in Section 234 (c) of R.A. No. 7160,

…the law states that the machinery must be actually, directly and exclusively used by the
government owned or controlled corporation;

The agreement POLAR undertakes that until the end of the Lease Period, it will operate the
Power Barges to convert such Fuel into electricity. Therefore, FELS shall be liable for the realty
taxes and not the NPC who is not actually, directly and exclusively using the same. It is a basic
rule that obligations arising from a contract have the force of law between the parties

CONCLUSION
Petitions are DENIED.
Davao Sawmill v. Castillo
G.R. No. L-40411, 7 August 1935

Facts:
Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Philippine Government
and operated a sawmill in the sitio of Maa, barrio of Tigatu, municipality of Davao. 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, it was agreed
upon that on the expiration of the period of their agreement, 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, with the exception of the machineries.

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.

On a number of occasions, 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.

Issue:
Whether the machineries and equipment were personal in nature.

Held:
Yes. 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.

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.

ANTONIO PUNSALAN, JR vs REMEDIOS VDA. DE LACSAMANA et al

G.R. No. L-55729
March 28, 1983

FACTS:

Antonio Punsalan, Jr was a former owner of a parcel of land situated in Bamban, Tarlac which
Punsalan mortgaged to PNB. Due to failure of payment of the mortgage, PNB foreclose the
property and PNB won the property in the bidding in a foreclosure proceeding.
While the property is still under the possession of Punsalan, upon securing a permit from the
City Mayor of Tarlac, constructed a warehouse on said property. Petitioner declared said
warehouse for tax purposes and later on had the warehouse leased to Hermogenes Sibal for a
period of 10 years. PNB then executed a deed of sale of the property which was amended
particularly to include in the sale the warehouse and the improvement thereon.
Punsalan commenced a suit for "Annulment of Deed of Sale with Damages" against herein
respondents PNB and Lacsamana essentially impugning the validity of the sale of the building as
embodied in the Amended 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.
Lacsamana averred the affirmative defense of lack of cause of action in that she was a
purchaser for value and invoked the principle in Civil Law that the "accessory follows the
principal". PNB filed a Motion to Dismiss on the ground that venue was improperly laid
considering that the building was real property under article 415 (1) of the New Civil Code.

ISSUE:

Whether or not the warehouse is considered a movable property under Article 415 of the Civil
Code?

RULING:

Yes. The warehouse claimed to be owned by petitioner is an immovable or real property as

provided in article 415(1) of the Civil Code. Buildings are always immovable under the Code. A
building treated separately from the land on which it stood is immovable property and the
mere fact that the parties to a contract seem to have dealt with it separate and apart from the
land on which it stood in no wise changed its character as immovable property.
TUMALAD VS. VICENCIO (G.R. NO. L-30173, SEPTEMBER 30, 1971)
APRIL 23, 2015

FACTS:
Some time in 1955, Alberta Vicencio and Emiliano Simeon loaned 4,800 pesos from Gavino and
Generosa Tumalad. As guarantee, they executed a chattel mortgage over their house in Quiapo
which, at that time, was being rented from Madrigal and Company, Inc.
The mortgage was registered in the Registry of Deeds of Manila. It was also agreed that default
in the payment of any of the amortizations will make the unpaid balance immediately due and
demandable.
The defendants-appellants thus defaulted in paying and the mortgage was extrajudicially
foreclosed. The house was auctioned and bought by the Tumalad’s as the highest bidder.
They then commenced an ejectment case in the MTC which ruled in favor of Tumalad. The
defendants-appellants then appealed to the RTC questioning the legality of the chattel
mortgage.
While pending, the MTC issued a writ of execution but cannot be carried because the house has
already been demolished 10 days before pursuant to an order in another ejectment case
against the defendants.
The RTC ruled then in favor of Tumalad and ordered the defendants to pay the rent. This was
appealed to the CA which, in turn, certified the case to the SC as only questions of law are
involved.
Defendants-appellants contend that the chattel mortgage was void because the subject matter
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.
ISSUE: Can defendants claim that the house is an immovable property?

RULING: No.

The parties to a contract may, by agreement, treat as personal property that which by nature
would be a real property if it was so expressly and specifically designated. This is based on the
principle of estoppel.
A mortgaged house 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.
It is now settled that an object placed on land by one who had only a temporary right to the
same does not become immobilized by attachment.
In the contract, the house was expressly designated as chattel mortgage which provides that:
“the mortgagor voluntarily cedes, sells and transfers by way of chattel mortgage…”
Although there is no specific statement referring to the house as personal property, the
defendants-appellants could only have meant to convey the house as chattek or intended to
treat the same as such sk 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-appellants merely had
a temporary right as lessee, and although this cannot in itself alone determine the status of the
property, it does so when combined with other factors to sustain the interpretation of the
parties.
The SC, however, reversed the decision appealed from on the ground that the purchaser of the
house is not yet entitled, as a matter of right, to its possession as there is a 1-year period within
which the mortgagor may redeem the property.
The period of redemption had not yet expired when action was instituted in the court of origin.
The original complaint stated no cause of action and was prematurely filed.

Navarro v. Pineda
GR No. L-18456
Property Law: Immovable Property

Facts:
Rufino Pineda and his mother, Juana Gonzales, borrowed from plaintiff Conrado Navarro, the
sum of P2550.00, and payable 6 months after date. Pineda executed “Deed of Real Estate and
Chattel Mortgages,” whereby his mother, by way of Real Estate Mortgage hypothecated a
parcel of land, belonging to her. 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.

The defendants failed to pay when the mortgage became due and payable. The plaintiff gave
two extensions. They still failed to pay.

When the plaintiff filed a complaint for foreclosure of the mortgage, defendant questioned the
validity of the chattel mortgage over his house on the ground that the house, being an
immovable property, could not be the subject of a chattel mortgage. Defendant cited cases to
prove their point (Lopez v. Ororsa; Associated Ins. & Surety Co. v. Iya; and Leung Yee v. Strong
Machinery Co.)

Additional note (for recit purposes):

– In the second extension, the defendants promised that should they fail to pay the obligation
on such date, they 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.

Issue:
Whether or not the Deed of Real Estate and Chattel Mortgages is valid, particularly on the
questions of whether or not the residential house, subject of the mortgage therein, can be
considered a chattel and the propriety of the attorney’s fees.

Held:
Yes. The Deed of Real Estate and Chattel Mortgage is valid. The parties to the contract treated
the house in question as personal or movable property. In the deed of chattel mortgage,
appellant Rufino G. Pineda conveyed by way of “Chattel Mortgage” “my personal properties,” a
residential house and a truck. The mortgagor himself grouped the house with the truck, which
is, inherently a movable property. The house which was not even declared for taxation
purposes was small and made of light construction materials: G.I. sheets roofing, sawali and
wooden walls and wooden posts; built on land belonging to another.

The cases cited by appellants are not applicable to the present case. The Iya cases refer to a
building or a house of strong materials, permanently adhered to the land, belonging to the
owner of the house himself. In the case of Lopez vs. Orosa the subject building was a theater,
built of materials worth more than P62,000.00 attached permanently to the soil. In these two
cases and in the Leung Yee Case, supra, third persons assailed the validity of the deed of chattel
mortgages; in the present case, it was one of the parties to the contract of mortgages who
assailed its validity.

RUBISO AND GELITO V. RIVERA

FACTS:
Gelito & Co. was owned by Bonifacio Gelito and Chinaman Sy Qui. One of the properties of the
company was a pilot ship/merchant vessel called Valentina, whose ownership is at question
here.

A series of sales had taken place:

First, Gelito had sold is 2/3 share to Chinaman Sy Qui.

When Sy Qui acquired full ownership of the company, he sold Valentina to Florentino Rivera for
P2,500 on January 4, 1915. The sale was registered in the Bureau of Customs over two months
later on March 17, 1915.
Shorty after the sale to Rivera, a suit was brought against Sy Qui to enforce payment of a
certain sum of money. Valentina was placed at a public auction and was purchased by Sy Qui’s
creditor, Fausto Rubiso. He bought the vessel for P55.45. The sale was registered in the Office
of the Collector of Customs on January 27, 1915 and in the commercial registry on March 14,
1925.

The first buyer, Florentino Rivera, contends that he had lost the ship when it got stranded
somewhere in Batangas. He claims that Rubiso took possession of the vessel without his
knowledge or consent. Rivera seeks to be indemnified for the profits he could have collected
from the vessel’s voyages had Rivera not taken it. But, does he have the right to the vessel?

ISSUE:
Who is the rightful owner of the merchant vessel--Rivera or Rubiso?
RULING:
Rubiso. It is true that the sale to Rivera had taken place prior to the public auction where
Rubiso bought the vessel, but the same was entered in the customs registry only on March 17,
1915. Rubiso, however, had acted more swiftly by registering the property much earlier in the
Office of the Collector Customs and in the commercial registry in the same month. Although the
sale to Rivera had taken place first, the registration made by Rubiso was made earlier.

Rubiso did the smart thing by registering the property at the commercial registry. Pursuant to
Article 573 of the Code of Commerce, the acquisition of a vessel must be registered at the
commercial registry in order to bind third parties. Such registration is necessary and
indispensible in order that the purchaser’s rights may be maintained against a claim filed by
third persons.

With respect to the rights of two purchasers, whichever of them first registered his acquisition
of the vessel is the one entitled to enjoy the protection of the law. By first registration, he
becomes the absolute owner of the boat and is freed from all encumbrances and claims by
strangers.

PIANSAY v. DAVID

FACTS:
Conrado S. David received a loan of P3,000 with interest at 12% per annum from Claudia B. Vda.
de Uy Kim, one of the plaintiffs, and to secure the payment of the same, Conrado S. David
executed a chattel mortgage on a house situated at 1259 Sande Street, Tondo, Manila. The
mortgage was foreclosed and was sold to Kim to satisfy the debt. 2 years later after the
foreclosure, the house was sold by Kim to Marcos Magubat. The latter then filed to collect the
loan from David and to declare the sale issued by Kim in favour of Piansay null and void. (It
appears that Kim sold the house to two people, namely Piansay and Magubat) The trial court
approved of the collection of the loan from David but dismissed the complaint regarding the
questioned sale between Kim and Piansay, declaring the latter as rightful owner of the house
and awarding damages to him. CA reversed the decision making David the rightful owner and
ing him and his co-defendant, Mangubat, to levy the house. Now Petitioners are trying to
release the said property from the aforementioned levy by claiming that Piansay is the rightful
owner of the house.

ISSUE:
Whether or not the sale between Kim and Piansay was valid?

RULING:
Since it is a rule in our law that buildings and constructions are regarded as mere accesories to
the land (following the Roman maxim omne quod solo inaedificatur solo credit) it is logical that
said accessories should partaked of the nature of the principal thing, which is the land forming,
as they do, but a single object (res) with it in contemplation of law. A mortgage creditor who
purchases real properties at an extra-judicial foreclosure sale thereof by virtue of a chattel
mortgage constituted in his favor, which mortgage has been declared null and void with respect
to said real properties acquires no right thereto by virtue of said sale Thus, Mrs. Uy Kim had no
right to foreclose the alleged chattel mortgage constituted in her favor, because it was in reality
a mere contract of an unsecured loan. It follows that the Sheriff was not authorized to sell the
house as a result of the foreclosure of such chattel mortgage. And as Mrs. Uy Kim could not
have acquired the house when the Sheriff sold it at public auction, she could not, in the same
token, it validly to Salvador Piansay. Conceding that the contract of sale between Mrs. Uy Kim
and Salvador Piansay was of no effect, we cannot nevertheless set it aside upon instance of
Mangubat because, as the court below opined, he is not a party thereto nor has he any interest
in the subject matter therein, as it was never sold or mortgaged to him 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
aforementioned contract or their privies. As a consequence, the sale of the house in question in
the proceedings for the extrajudicial foreclosure of said chattel mortgage, is null and void
insofar as defendant Mangubat is concerned, and did not confer upon Mrs. Uy Kim, as buyer in
said sale, any dominical right in and to said house, so that she could not have transmitted to her
assignee, plaintiff Piansay any such right as against defendant Mangubat. In short plaintiffs have
no cause of action against the defendants herein.

LUIS MARCOS LAUREL V HON. ZEUS ABROGARGR NO. 155076, JANUARY 13, 2009YNARES-
SANTIAGO, J.:

FACTS:Petitioner Luis Marcos P. Laurel is one of the accused in a crime of theft filedwith the
Regional Trial Court of Makati. The allegations in the amended informationstates that herein
petitioner and his co-accused take steal and use the international longdistance call belonging to
PLDT by illegally connecting various equipment or apparatusto PLDT’s telephone system,
through which petitioner is able to resell or re-routeinternational long distance calls using
PLDT’s facilities.Petitioner filed a motion to quash the information and thereafter filed a Motion
forReconsideration on the ground that the factual allegations do not constitute the felony
oftheft which was both denied by the Trial Court.The Court of Appeals also dismissed the
petitioner’s special civil action forcertiorari. Subsequently, a petition for review was filed with
the Supreme Court’s firstdivision which granted the motion of the petitioner to quash the
information forinsufficiency in the allegations stating that international long distance calls and
thebusiness of proving telecommunication or telephone services are not personal
propertiesunder Article 308 of the RPC.Respondent Philippine Long Distance Telephone
Company filed a motion forreconsideration with motion to refer the case to the Supreme Court
En Banc andmaintains that the amended information is valid and sufficient. PLDT alleges that
theinternational calls and business of providing telecommunication or telephone service
arepersonal properties capable of appropriation and can be objects of theft.
ISSUE:Whether or not the business of providing telecommunication or telephone serviceare
personal properties capable of appropriation and can be objects of theft?

HELD:Yes. The business of providing telecommunication or telephone service is apersonal

property which can be the object of theft.Prior to the passage of the Revised Penal Code, this
Court, in US v. Genato andUS v. Tambunting, consistently ruled that any personal property,
tangible or intangible,corporeal or incorporeal, capable of appropriation can be the object of
theft. Moreover,since the passage of the Revised Penal Code, the term “personal property’ has
had agenerally accepted definition in civil law. In Article 335 of the Civil Code of Spain,“personal
property” is defined as “anything susceptible of appropriation and not includedin the foregoing
chapter (not real property). Cognizant of the definition given byjurisprudence and the Civil Code
of Spain to the term “personal property” at the time theold penal code was being revised, still
the legislature did not limit or qualify thedefinition of “personal property” in the Revised Penal
Code.