TUMALAD vs. VICENCIO, G.R. No.

L-30173, September 30, 1971

TUMALAD V. VICENCIO

41 SCRA 143

FACTS:

Vicencio and Simeon executed a chattel mortgage in favor of plaintiffs Tumalad over their house, which
was being rented by Madrigal and company. This was executed to guarantee a loan, payable in one year
with a 12% per annum interest.

The mortgage was extrajudicially foreclosed upon failure to pay the loan. The house was sold at a public
auction and the plaintiffs were the highest bidder. A corresponding certificate of sale was issued.
Thereafter, the plaintiffs filed an action for ejectment against the defendants, praying that the latter
vacate the house as they were the proper owners.

ISSUE:

W/N the chattel mortgage was null and void ab initio because only personal properties can be subject of
a chattel mortgage.

HELD:

Certain deviations have been allowed from the general doctrine that buildings are immovable property
such as when through stipulation, parties may agree to treat as personal property those by their nature
would be real property. This is partly based on the principle of estoppel wherein the principle is predicated
on statements by the owner declaring his house as chattel, a conduct that may conceivably stop him from
subsequently claiming otherwise.

In the case at bar, though there be no specific statement referring to the subject house as personal
property, yet by ceding, selling or transferring a property through chattel mortgage could only have meant
that defendant conveys the house as chattel, or at least, intended to treat the same as such, so that they
should not now be allowed to make an inconsistent stand by claiming otherwise.
Prudential Bank v. Panis, G.R. No. 5008 (August 31, 1988) Case Digest

Article 415 of the Civil Code: Real Property

Facts:

The spouses Magcale obtained a Php 70, 000 loan from Prudential Bank secured by a Deed of Real Estate
Mortgage over a 2-storey, semi-concrete residential building including the right of occupancy on the land.

When the spouses Magcale executed this mortgage, the land still belonged to the government as the Sales
Patent over the lot applied for by the spouses Magcale was not yet issued.

Issue:

Whether or not a real estate mortgage over a building erected on the land belonging to another is valid.

Held:

Yes, a real estate mortgage over a building erected on the land belonging to another is valid.

Article 415 of the Civil Code provides the inclusion of "building" separate and distinct from the land, which
can only mean that a building is by itself an immovable property.

A mortgage of land necessarily includes buildings unless otherwise stipulated. A building by itself,
however, may be mortgaged apart from the land on which it has been built. Such a mortgage would still
be a real estate mortgage for the building alone would still be considered an immovable property.

MAKATI LEASING AND FINANCE CORP. V. WEAREVER TEXTILE MILLS, INC.

Parties to a contract may by agreement treat as personal property that which by nature is a real property,
as long as no interest of 3rd party would be prejudiced.

FACTS:

To obtain financial accommodations from Makati Leasing, Wearever Textile discounted and assigned
several receivables under a Receivable Purchase Agreement with Makati Leasing. To secure the collection
of receivables, it executed a chattel mortgage over several raw materials and a machinery – Artos Aero
Dryer Stentering Range (Dryer).

Wearever defaulted thus the properties mortgaged were extrajudicially foreclosed. The sheriff, after the
restraining order was lifted, was able to enter the premises of Wearever and removed the drive motor of
the Dryer. The CA reversed the order of the CFI, ordering the return of the drive motor since it cannot be
the subject of a replevin suit being an immovable bolted to the ground. Thus the case at bar.

ISSUE:

Whether the dryer is an immovable property

HELD: NO

The SC relied on its ruling in Tumalad v. Vicencio, that if a house of strong materials can be the subject of
a Chattel Mortgage as long as the parties to the contract agree and no innocent 3rd party will be
prejudiced then moreso that a machinery may treated as a movable since it is movable by nature and
becomes immobilized only by destination. And treating it as a chattel by way of a Chattel Mortgage,
Wearever is estopped from claiming otherwise.

A house of strong materials 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 reasonwhy 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.

Serg's Products, Inc. v. PCI Leasing and Finance, Inc., G.R. No. 137705 (August 22, 2000) Case Digest

Real Properties

PCI Leasing and Finance, Inc. (PCI) filed a complaint for a sum of money with an application of writ of
replevin. The judge issued a writ of replevin directing its sheriff to seize and deliver the machinery and
equipment to PCI.

Serg filed a motion for special protective order praying for a directive for the sheriff to defer the
enforcement of the writ of replevin contending that the machines were not proper subjects of the writ
because they are in fact real property defined in Article 415 of the Civil Code.

ART. 415. The following are immovable property:

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;

xxx

PCI opposed the motion on the ground that Section 12.1 of their Lease Agreement clearly provided that
the machines were to be considered as personal property.

2.1 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.

Issue:

Whether the machinery are considered a real or personal property.

Held:
The machinery are considered personal property.

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, Serg is estopped from denying the characterization of the machinery as personal property, which
are proper subjects of Writ of Seizure.

19. TSAI V. CA Gr. No. 120098, October 2, 2001 FACTS:

Ever Textile Mills, Inc. (EVERTEX) obtained loan from Philippine Bank of Communications (PBCom),
secured by a 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 again granted a second
loan to EVERTEX which was secured by a Chattel Mortgage over personal properties similar to those listed
in the first mortgage deed. During the execution of the second mortgage, EVERTEX purchased various
machines and equipment. Upon EVERTEX's failure to meet its obligation. PBCom, commenced
extrajudicial foreclosure of the mortgage. PBCom leased the entire factory premises to Ruby Tsai and sold
to the same the factory, lock, stock and barrel including the contested machineries. EVERTEX filed a
complaint for annulment of sale, reconveyance, and damages against PBCom, alleging that the
extrajudicial foreclosure of subject mortgage was not valid, and that PBCom, without any legal or factual
basis, appropriated the contested properties which were not included in the Real and Chattel Mortgage
of the first mortgage contract nor in the second contract which is a Chattel Mortgage, and neither were
those properties included in the Notice of Sheriff's Sale.

ISSUE:

Whether or not the machineries and equipment were personal properties

HELD:

YES, the machineries and equipment are personal properties. The nature of the disputed machineries,
i.e., that they were heavy, bolted or cemented on the real property mortgaged does not make them ipso
facto immovable under Article 415 (3) and (5) of the New Civil Code. While it is true that the properties
appear to be immobile, a perusal of the contract of Real and Chattel Mortgage executed by the parties
herein reveal their intent, that is - to treat machinery and equipment as chattels. If the machineries in
question were contemplated to be included in the real estate mortgage, there would have been no
necessity to ink a chattel mortgage specifically with a listing of the machineries covered thereby.
Assuming 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, where 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.
22. MANILA ELECTRIC CO. V. CENTRAL BOARD OF ASSESSMENT APPEALS 114 SCRA 273 FACTS:

Petitioner owns two oil storage tanks, made of steel plates wielded and assembled on the spot. Their
bottoms rest on a foundation consisted of compacted earth, sand pad as immediate layer, and asphalt
stratum as top layer. The tanks are within the Caltex refinery compound. They are used for storing fuel oil
for Meralco's power plants. The municipal treasurer of Batangas made an assessment for realty tax on the
two tanks, based on the report of the Board of Assessors. Meralco 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 the tanks
are not attached to the land and that they were placed on leased land, not on the land owned by Meralco.

ISSUE : Whether or not the oil storage tanks constitute real property for the purposes of real property tax

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

Caltex Philippines, Inc. v. Board of Assessment Appeals, G.R. No. L-50466 (May 31, 1982) Case Digest

Facts:

Caltex loaned machines and equipment to gas station operators under a lease agreement, which
stipulated that upon demand, the operators shall return to Caltex the machines and equipment. The
lessor of the land does not become the owner of the machines and equipment. Caltex retains their
ownership.

The City Assessor characterized the said machines and equipment as taxable realty. However, the City
Board of Tax Appeals ruled that they are personalty. The Assessor appealed to the Central Board of
Assessment Appeals.

The Board held that the said machines are real property within the meaning of Sec. 3(k) & (m) and 38 of
the Real Property Tax Code, PD 464, and that the Civil Code definitions of real and personal property in
Articles 415 and 416 are not applicable in this case.

Issue:

Whether or not the said machines and equipment are real property subject to realty tax?

Held:

The said machines and equipment are considered real property.

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.— There 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 definitions 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.

m) Machinery — shall embrace machines, mechanical contrivances, instruments, appliances and

apparatus attached to the real estate. It includes the physical facilities available for production, as well as
the installations and appurtenant service facilities, together with all other equipment designed for or
essential to its manufacturing, industrial or agricultural purposes (See sec. 3[f], Assessment Law).

The machines and equipment 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.

Therefore, the machines and equipment are real property subject to realty tax.

Secretary of DENR vs Yap

Natural Resources and Environmental Laws: Regalian Doctrine

GR No. 167707; Oct 8, 2008

FACTS:

This petition is for a review on certiorari of the decision of the Court of Appeals (CA) affirming that of the
Regional Trial Court (RTC) in Kalibo Aklan, which granted the petition for declaratory relief filed by
respondents-claimants Mayor Jose Yap et al, and ordered the survey of Boracay for titling purposes.

On Nov. 10, 1978, President Marcos issued Proclamation No. 1801 declaring Boracay Island as a tourist
zone and marine reserve. Claiming that Proc. No. 1801 precluded them from filing an application for a
judicial confirmation of imperfect title or survey of land for titling purposes, respondents-claimants filed
a petition for declaratory relief with the RTC in Kalibo, Aklan.

The Republic, through the Office of the Solicitor General (OSG) opposed the petition countering that
Boracay Island was an unclassified land of the public domain. It formed part of the mass of lands classified
as “public forest,” which was not available for disposition pursuant to section 3(a) of PD No. 705 or the
Revised Forestry Code.
ISSUE: Whether unclassified lands of the public domain are automatically deemed agricultural land,
therefore making these lands alienable.

HELD:

No. To prove that the land subject of an application for registration is alienable, the applicant must
establish the existence of a positive act of the government such as a presidential proclamation or an
executive order, an administrative action, investigative reports of the Bureau of Lands investigators, and
a legislative act or statute.

A positive act declaring land as alienable and disposable is required. In keeping with the presumption of
state ownership, the Court has time and again emphasized that there must be a positive act of the
government, such as an official proclamation, declassifying inalienable public land into disposable land for
agricultural or other purposes.

The Regalian Doctrine dictates that all lands of the public domain belong to the State, that the State is the
source of any asserted right to ownership of land and charged with the conservation of such patrimony.

All lands not otherwise appearing to be clearly within private ownership are presumed to belong to the
State. Thus, all lands that have not been acquired from the government, either by purchase or by grant,
belong to the State as part of the inalienable public domain.

HEIRS OF MALABANAN VS REPUBLIC, GR NO. 179987, 29 APR. 2009

FACTS: On Feb 20, 1998 Malabanan fled an applicaton ±or land regis²raton, covering a parcel o± land in
Silang Cavi²e. He bough² ²he land ±rom one Velasco and had been in open, no²orious, contnuous and
adverse and peace±ul possession ±or more ²han 30 years. He also presen²ed ²ax declaraton since 1948.

ISSUE: Whe²her Malabanan’s possession o± ²he land had already ripened ²o ownership.

RULING:

There are ²wo ways how Malabanan can acquire ²he proper²y:

(A) Under SEC 14(1) o± PD1529, which s²a²es ²ha² ²hose who by ²hemselves or ²hrough ²heir predecessors-
in-in²eres² have been in open, contnuous, exclusive and no²orious possession and occupaton o± alienable
and disposable lands o± public domain under a bona fde claim o± acquisiton o± ownership since June 12,
1945. Under ²his, ²he land need no² ²o be alienable and disposable during ²he entre period o± possession.
One can secure judicial confrmaton as soon as i² is declared alienable and disposable.

(B) Under SEC 14(2) o± PD1529, which per²ains ²o prescripton as a mode o± acquiring ownership over
“PATRIMONIAL PROPERTY” o± ²he s²a²e bu² ²here mus² be an express declaraton ²ha² such proper²y is
already pa²rimonial. The prescriptve period is 10 years i± wi²h jus² t²le and 30 years i± no jus² t²le.

Petiton was denied because Malabanan is no² qualifed under ²he ²wo circums²ances. In ²he frs², ²here is
no evidence o± possession since June 12, 1945 since his ²ax declaraton is only since 1948. While under
²he second circums²ance, ²he proper²y becomes pa²rimonial only since 1982 and ²he 30-year period o±
prescripton is no² ye² me².
Republic vs Naguiat

Natural Resources and Environmental Laws

G.R. No. 134209; January 24, 2006

FACTS:

Celestina Naguiat filed an application for registration of title to four parcels of land located in Panan,
Botolan, Zambales. The applicant alleges that she is the owner of the said parcels of land having acquired
them by purchase from its previous owners and their predecessors-in-interest who have been in
possession thereof for more than thirty (30) years; and that to the best of her knowledge, said lots suffer
no mortgage or encumbrance of whatever kind nor is there any person having any interest, legal or
equitable, or in possession thereof.

Petitioner Republic opposed on the ground that neither the applicant nor her predecessors-in interest
have been in open, continuous, exclusive and notorious possession and occupation of the lands in
question since 12 June 1945 or prior thereto, considering the fact that she has not established that the
lands in question have been declassified from forest or timber zone to alienable and disposable property.

ISSUE:

Did the areas in question cease to have the status of forest or other inalienable lands of the public domain?

HELD:

No, the said areas are still classified as forest land.The issue of whether or not respondent and her
predecessors-in-interest have been in open, exclusive and continuous possession of the parcels of land in
question is of little moment. For, unclassified land cannot be acquired by adverse occupation or
possession; occupation thereof in the concept of owner, however long, cannot ripen into private
ownership and be registered as title.

A forested area classified as forest land of the public domain does not lose such classification simply
because loggers or settlers have stripped it of its forest cover. Parcels of land classified as forest land may
actually be covered with grass or planted to crops by kaingin cultivators or other farmers. "Forest lands"
do not have to be on mountains or in out of the way places. The classification is merely descriptive of its
legal nature or status and does not have to be descriptive of what the land actually looks like.