Davao Sawmill Co. v. Castillo 61 Phil.

709
Facts: Davao Saw Mill Co, is the holder of a lumber concession, it has operated a sawmill in thesi
tio of Maa, barrio of Tigatu, municipality of Davao, Province of Davao. However, the land upon
which the business was conducted belonged to another person. The company erected a building
therein which housed the machinery used by it. Some of the machines 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.

On a separate case, Sawmill apparently executed the machinery in a chattel mortgage in favor of
Davao Light. A writ of execution issued thereon that the properties now in question were levied
upon as personalty by the sheriff. The bidder, Davao Light proceeded to take possession of the
machinery and other properties described in the certificate of sale.
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.
T h e   c o m p a n y   a s s a i l e d   t h e   s a i d   w r i t contending that the machineries and accessories
were personal in nature, hence, not subject to writ of execution.
Issue:
Whether or not the subject properties are personal in nature.
Held:
 The subject properties are personal in nature.Article 334, paragraph 5, of the [Old] Civil
Codeprovides that real property consists of (5) Machinery, liquid containers,
instruments or implementsintended by the owner of any building or land for use in connection
with any industry or trade being
carried on therein and which are expressly adapted to meet the requirements 
o f   s u c h   t r a d e   o f   industry.
Machinery which is movable in nature only becomes immovable when placed in a land by
theo w n e r o f t h e p r o p e r t y o r l a n d b u t n o t w h e n s o p l a c e d b y a t e n a n t o r a n y
p e r s o n h a v i n g o n l y a temporary right, unless such person acted as the agent of the owner. In
the case at bar, the machineryis intended not by the owner of the land but by the saw mill
company for use in connection with itstrade, to be returned to the lessee on the expiration or
abandonment of the lease In this sense, the machinery is not a real property.

B. H. BERKENKOTTER vs. CU UNJIENG E HIJOS

This is an appeal taken by the plaintiff, B. H. Berkenkotter, from the judgment of the Court of First Instance of Manila, dismissing
said plaintiff’s complaint against Cu Unjieng e Hijos et al
1. On 26 April 1926, the MabalacatSugar Company obtained from CuUnjieng e Hijos, a loan secured by afirst
mortgage constituted on 2parcels of land "with all its buildings,improvements, sugar-canemill,s t e e l
railway, telephone line,apparatus, utensils andwhatever
forms part or is anecessarycomplement of saidsugar-cane
m i l l , s t e e l r a i l w a y , t e l e p h o n e l i n e , n o w e x i s t i n g o r that may in
t h e f u t u r e e x i s t i n s a i d lots.” 2 .   O n   5   O c t o b e r   1 9 2 6 ,   t h e M a b a l a c a t
Sugar Companydecided to increase thecapacity of its
sugar central bybuying additional machineryand
eq uipm ent , so tha t inst ea d of milling 150 tons daily, it
c o u l d produce 250.3. Green proposed to the Berkenkotter,to advance the necessary amountfor the
purchase of said machineryand equipment, promising toreimburse him as soon as he couldo b t a i n a n
additional loan fromth e mo rtgag ees , Cu Unjien g eHij os , and
that in case Greenshould fail to obtain anadditional loan
from Cu Unjienge Hijos, said machinery andequipment
w o u l d b e c o m e security therefore, said Greenbinding himself not to mortgage norencumber them to
anybody untilBerkenkotter be fully reimbursedfor the corporation's indebtednessto him.4. Having agreed to said
proposition madein a letter dated 5 October 1926,Berkenkotter, on 9 October 1926, deliveredthe sum of P1,710
to Green, the totalamount supplied by him to Green havingb e e n P 2 5 , 7 5 0 .
Furthermore,Berkenkotter had a credit of P22,000against
s a i d c o r p o r a t i o n f o r u n p a i d salary.WiththeloanofP25,750andsaidcreditofP22,000,theMabalacatSugar
Co.,Inc.,purchasedtheadditionalmachineryand equipment.On 10June 1927, Green applied to Cu Unjieng eHijos for an
additional loan of P75,000offering assecurity the additional machineryand equipment acquired by said Green
andinstalled in the sugar central after theexecution of the original mortgage deed, on27 April 1927, together
withw h a t e v e r a d d i t i o n a l e q u i p m e n t a c q u i r e d w i t h
s a i d l o a n . G r e e n f a i l e d t o o b t a i n s a i d
l o a n . H e n c e , a b o v e mentionedmortgagewasineffect.
Issue:

 Whether
additional
machinery and
equipment
alsoconsidered
mortgaged
executed in favor
of CuUnjieng e
Hijos?
Held: Yes. The additional machinery andequipment are included. RD:
 Article 1877 of the Civil Code provides thatmortgage includes all natural
accessions,i m p r o v e m e n t s , g r o w i n g f r u i t s , a n d r e n t s n o t
c o l l e c t e d w h e n t h e o b l i g a t i o n f a l l s d u e ,
a n d t h e a m o u n t o f   a ny indemnities paid or due the
ownerby the insurers of the mortgagedproperty or by
virtue of theexercise of thepower of eminent domain,with
t h e d e c l a r a t i o n s , a m p l i f i c a t i o n s ,   a n d   l i m i t a t i o n s established by law,
whether the statecontinues in the possession of the personwho mortgaged it or whether it passes intothe hands of
a third personIt is a rule, that in a mortgage of real estate,the improvements on the same are

 
included; therefore, all objects permanentlyattached to a mortgaged building or land,although they may have been
placed thereafter the mortgage was constituted, are alsoincluded. Article 334, paragraph 5, of theCivil Code gives
the character of realproperty to machinery, liquid containers,i n s t r u m e n t s o r
i m p l e m e n t s i n t e n d e d b y t h e o w n e r o f a n y b u i l d i n g o r l a n d for
use in connection with any industry ortrade being carried on therein and which areexpressly adapted
to meet the requirementsof such trade or industry. The installation ofa machinery and equipment in
am o r t g a g e d s u g a r c e n t r a l , i n l i e u o f a n o t h e r o f l e s s
c a p a c i t y , f o r t h e p u r p o s e o f c a r r y i n g o u t t h e i n d u s t r i a l functions of the latter
and increasingproduction, constitutes a permanentimprovementonsaidsugarcentralandsubjectssaidmachineryandequipmentto
themortgageconstitutedthereon.

L:opez V. Orosa, Jr. and Plaza Theatre Inc.

G.R. No. L-10817-18

Facts: Enrique Lopez, doing business under the trade name of Lopez-Castillo Sawmill, was invited
by Vicente Orosa, Jr. to make an investment in the theatre business namely Plaza Theatre Inc.
Lopez expressed his unwillingness to invest, however agreed to supply lumber necessary for the
construction of the theatre with the assurance that Orosa would be personally liable for any
account that the said construction might incur. Lopez was paid only P20, 848.50 instead P62,
255.85 which was the total cost of the materials. Persistent demand from Lopez for the payment of
the amount due him caused Orosa to execute an alleged "deed of assignment" of his 420 shares
of stock of Plaza Theatre Inc. in favor of the creditor. Lopez filed a complaint with the CFI of
Batangas against Orosa and Plaza Theatre Inc. praying that defendants be sentenced to pay him
jointly and severally the unpaid balance amounting to P41, 771.35 with legal interest. The lower
court held that that defendants Vicente Orosa, Jr., and the Plaza Theatre, Inc., were jointly liable
for the unpaid balance of the cost of lumber used in the construction of the building and the
plaintiff thus acquired the materialman's lien over the same. Plaintiff tried to secure a modification
of the decision in so far as it declared that the obligation of therein defendants was joint instead of
solidary, and that the lien did not extend to the land, but same was denied by order the court.
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, separate and
distinct from the land, in the enumeration of what may constitute real properties1 could mean only
one thing — that a building is by itself an immovable property, a doctrine already pronounced by
this Court in the case of Leung Yee vs. Strong Machinery Co., 37 Phil., 644. Moreover, and in view
of the absence of any specific provision of law 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.

Associated Insurance and Surety Company v. Iya103 SCRA 972

DOCTRINE:A building is an immovable property irrespective of where or n
ot 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-compliancewith 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.

TUMALADvs.VICENCIO
On 1 September 1955 Vicencio and Simeon executed a chattel mortgage
in favor of the Tumalads over their house of strong materials 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 the Tumalads,payable within one year at 12%
yearly. Monthly payments are to be made starting September 1955 to July
1956, and the lump sum of P3,150 was payable on or before August 1956.
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, the Chattel Mortgage enforceable, and the Sheriff of Manila
authorized the to sell the property in a public auction for payment of debt.
When Vicencio and Simeon defaulted in paying, the mortgage was extra
judicially foreclosed, and on 27 March 1956, the house was sold at public
auction pursuant to the said contract. As highest bidder, the Tumalads
were issued the corresponding certificate of sale.On 18 April 1956, the
Tumalads commenced civil case in the MTC of Manila, praying that the
house be vacated and its possession surrendered to them, and for
Vicencio and Simeon to pay rent of P200.00 monthly from 27 March 1956
up to the time the possession is surrendered. On 21 September 1956, the
municipal court rendered its decision in favor of the Tumalads. Vicencios
appealed to the court a quo which also rendered a decision against them.
On appeal, the case was elevated to the Supreme Court by the Court of
Appeals for the reason that only questions of law are
involved.Tumalads failed to file a brief and this appeal was submitted for decision
without it.Nearly a year after the foreclosure sale the mortgaged house had
been demolished on January 1957by virtue of a decision obtained by the less or
of the land on which the house stood.

ISSUE:Whether or not the chattel mortgage was null and void

ab initio
because only personal properties can be subject of a chattel mortgage?

HELD:The inclusion of the building, separate and distinct from the land, inthe enumeration of what
may constitute real properties (art. 415, New Civil Code) could only mean one thing — thata
building is by itself an immovable propertyirrespective of whether or not said structure and the land
on which it is adhered to belong to the same owner.

Makati Leasing vs. Wearever Textile(GR 58469 May 16, 1983)

Facts:Wearever Textile Mills, Inc. discounted and assigned several receivables with
MakatiLeasing and Financial Corp. under a Receivable Purchase Agreement so that the
latter wouldlend money to the former. In order to secure the collection of the
receivables assigned, Wearever executed a Chattel Mortgage over certain raw
materials inventory as well as amachinery (Artos Aero Dryer Stentering Range). Upon
default of Wearever in paying what isdue, Makati Leasing filed a petition for extrajudicial
foreclosure of the properties mortgaged to it.Enforcing then the writ of seizure issued by the
lower court, the Sheriff removed the main drivemotor of the machinery. Upon appeal, CA
reversed the ruling of the RTC and ordered the returnof the motor to Wearever since the said
machinery cannot be the subject of a replevin and chattel mortgage for it is a real property
pursuant to Art. 415 (3) of the NCC. CA argued that themachinery is attached to the ground by
means of bolts and the only way to remove it from therespondent’s plant would be to drill out
or destroy the concrete floor – which is why all that thesheriff could do to enforce the writ was to
take the main drive motor of the machinery.

Issue:Whether the machinery is a personal property.

Held:Yes. By destination, it is a real property but by virtue of the intention of the

partiesstipulated in their chattel mortgage contract, the machinery was intended to be a
personalproperty. The Court made reference to its ruling in Tumalad v. Vicencio and Standard Oil
Co. of

New York v. Jaramillo where it held that a real property may be considered as a
personalproperty for purposes of executing a chattel mortgage thereon as long as the
parties to thecontract so agree and no innocent third party will be prejudiced thereby, and once
the parties soagreed, they are already stopped from claiming otherwise. Private respondent
contended thatits characterization of the subject machinery as chattel in their
agreement should not be appreciated against it because it had never represented nor
agreed in such as it was merelyrequired and dictated on by the petitioner to sign a chattel
mortgage in blank form. The Courtwas not persuaded by its contention as the said issue
was not duly raised in the lower andappellate courts nor will the said signing in blank by the
respondent make the contract void butmerely voidable by a proper action in court. Furthermore
as it was undeniable that it benefitedfrom the chattel mortgage, it cannot be allowed to impugn
its efficacy for equity reasons.
Wearever Textile Mills, Inc. executed a chattel mortgage contract in favor of Makati Leasing and
Finance Corporation covering certain raw materials and machinery. Upon default, Makati Leasing
filed a petition for judicial foreclosure of the properties mortgaged. Acting on Makati Leasing’s
application for replevin, the lower court issued a writ of seizure. Pursuant thereto, the sheriff
enforcing the seizure order and removed the main motor of the subject machinery. In a petition for
certiorari and prohibition, the Court of Appeals ordered the return of the machinery on the ground
that the same cannot be the subject of replevin 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 Wearever textile’s plant would be to drill out or destroy the concrete floor. When
the motion for reconsideration of Makati Leasing was denied by the Court of Appeals, Makati
Leasing elevated the matter to the Supreme Court.

Issue:
Whether or not the machinery in suit is real or personal property from the point of view of the
parties.

Held:
The said machinery is a personal property. Like what was involved in the  Tumalad case, if
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 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 the denying the existence
of the chattel mortgage. The decision of the Court of Appeals was set aside and the order of the
lower court was reinstated.

BOARD  OF  ASSESSMENT  APPEALS  V.  MANILA  ELECTRIC COMPANY

10 SCRA 68

FACTS:
City Assessor of QC declared the steel towers for real property tax under Tax Declarations.  After
denying the respondent’s petition to cancel these declarations, an appeal was taken with the CTA
which held that the steel towers  come  under  the  exception  of  “poles”  under  the  franchise 
given  to MERALCO; the steel towers are personal properties; and the City Treasurer is liable for
the refund of the amount paid.
 Facts: On 20 October 1902, the Philippine Commission enacted Act 484 which authorized the
Municipal Board of Manila to grant a franchise to construct, maintain and operate an electric street
railway and electric light, heat and power system in the City of Manila and its suburbs to the
person or persons making the most favorable bid. Charles M. Swift was awarded the said
franchise on March 1903, the terms and conditions of which were embodied in Ordinance 44
approved on 24 March 1903. Meralco became the transferee and owner of the franchise.
Meralco’s electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna
and is transmitted to the City of Manila by means of electric transmission wires, running from the
province of Laguna to the said City. These electric transmission wires which carry high voltage
current, are fastened to insulators attached on steel towers constructed by respondent at intervals,
from its hydroelectric plant in the province of Laguna to the City of Manila. Meralco has
constructed 40 of these steel towers within Quezon City, on land belonging to it.
On 15 November 1955, City Assessor of Quezon City declared the aforesaid steel towers for real
property tax under Tax Declaration 31992 and 15549. After denying Meralco’s petition to cancel
these declarations an appeal was taken by Meralco to the Board of Assessment Appeals of
Quezon City, which required Meralco to pay the amount of P11,651.86 as real property tax on the
said steel towers for the years 1952 to 1956. Meralco paid the amount under protest, and filed a
petition for review in the Court of Tax Appeals which rendered a decision on 29 December 1958,
ordering the cancellation of the said tax declarations and the City Treasurer of Quezon City to
refund to Meralco the sum of P11,651.86. The motion for reconsideration having been denied, on
22 April 1959, the petition for review was filed.
Issue: Whether or not the steel towers of an electric company constitute real property for the
purposes of real property tax.

HELD:
The steel towers of an electric company don’t constitute real property for the purposes of real
property tax.The steel towers of an electric company don’t constitute real property for the purposes
of real property tax.
Steel towers are not immovable property under paragraph 1, 3 and 5 of Article 415.

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 merely sit on its foundation.
 
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 wished to oppose this assessment as they
averred that the tanks are not real properties.   
 

HELD:
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.
 
For purposes of taxation, the term real property may include things, which should  generally  be 
considered  as  personal  property.    it  is  familiar phenomenon  to  see  things  classified  as 
real  property  for  purposes  of taxation  which  on  general  principle  may  be  considered  as 
personal
Meralco Securities v. Central Board of Assessment
Appeals

G.R. No. L-46245 May 31, 1982

Aquino, J.:

Facts: Petitioner questions the decision of the respondent which held that petitioner’s pipeline is
subject to realty tax. Pursuant to a concession, petitioner installed a pipeline system from Manila
to Batangas. Meanwhile, the provincial assessor of Laguna treated the pipeline as real property.
So, petitioner appealed the assessments to the Board of Assessment Appeals of Laguna. The
board upheld the assessments and the decision became final and executory after the lapse of
fifteen days from the date of receipt of a copy of the decision by the appellant. Meralco Securities
contends that the Court of Tax Appeals has no jurisdiction to review the decision of the Central
Board of Assessment Appeals and no judicial review of the Board's decision is provided for in the
Real Property Tax Code. Hence, the petitioner’s recourse to file a petition for certiorari.

Held: It was held that certiorari was properly availed of in this case. It is a writ issued by a superior
court to an inferior court, board or officer exercising judicial or quasi-judicial functions whereby the
record of a particular case is ordered to be elevated for review and correction in matters of law.

The rule is that as to administrative agencies exercising quasi-judicial power there is an underlying
power in the courts to scrutinize the acts of such agencies on questions of law and jurisdiction
even though no right of review is given by the statute. The purpose of judicial review is to keep the
administrative agency within its jurisdiction and protect substantial rights of parties affected by its
decisions. The review is a part of the system of checks and balances which is a limitation on the
separation of powers and which forestalls arbitrary and unjust adjudications. Judicial review of the
decision of an official or administrative agency exercising quasi-judicial functions is proper in
cases of lack of jurisdiction, error of law, grave abuse of discretion, fraud or collusion or in case
the administrative decision is corrupt, arbitrary or capricious.

Calte/ vs Central Boar( o! *ssessment *ppeals

114
SCR(#)35ats T h i s    a s e   i s   a b o u t   t h e   r e a l t '   t a .   o n   m a  h i n e r '   a n &   e " u i p m e n t   i n
s t a l l e &   b '   C a l t e . 9Philippines; n    in its gas stations loate& on lease& lan&The lessor
of the lan&8 +herethe gas station is loate&8 &oes not beome the o+ner of the mahines an&
e"uipmentinstalle& therein Calte. retains the o+nership thereof &uring the term of the lease The it'
assessor of Pasa' Cit' harateri:e& the sai& items of gas station e"uipmentan& mahiner' as
ta.able realt' But The it' boar& of ta. appeals rule& that the' arepersonalt'ssue Ehether or
not the subje  t ma  h iner' an& e"uipment installe& b' Calte. in its gas stations shoul& be
onsi&ere& realt' <el&=es mprovements on lan& are ommonl' ta.e& as realt' The
e"uipment an& mahiner' asappurtenanes to the gas station buil&ing or she& o+ne& b' Calte.
an& +hih fi.turesare neessar' to the operation of the gas station8 for +ithout them the gas
station +oul&be useless8 an& +hih  have been attahe& an& fi.e& permanentl' to the gas
station siteor embe&&e& therein8 are ta.able improvements an& mahiner' +ithin the meaningof the
(ssessment a+ an& the Real Propert' Ta. Co&e9appurtenane an objet  that is use& +ith or

Sibal v. ValdezG.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 V
italiano 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, theref
ore, 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 Mortgag
e Law,
"ungathered products" have the nature of personal property. The lower court, therefore,

'in(anao Bus Co" vs" Cit) *ssessor

6 SCR( 1$)%*( (D BUS CD%P(= A petitioner CT= (SSSSDR8 et al A
respon&ents5a ts Petitioner is engage& in a publi utilit' business8 solel' engage&
in transportingpassengers an& argoes b' motor truks8  over its authori:e& lines in %in&anao t
o+nsa   m a i n   o f f i e   a n &   b r a n h   o f f i e s    T o
b e   f o u n &   i n   t h e i r   o f f i e s   a r e   m a h i n e r '   a n & e"uipment8 +hih +ere assesse& b' the Cit'
(ssessor as real propertiesThe Court of Ta. (ppeals hel& that the petitioner %in&anao Bus Compan'
is liable tothe pa'ment of the realt' ta. on its maintenane an& repair e"uipmentPetitioner appeale& the
assessment8 onten&ing that sai& e"uipment are not realt' 
Dn the other han&8 respon&ents o nten& that sai& e"uipments8 though movable8
areimmobili:e& b' &estination8 iting (rt 41- 9-;
% a h i n e r ' 8   r e e p t a l e s 8   i n s t r u m e n t s   o r   i m p l e m e n t s   i n t e n & e &   b '   t h e   o + n e r  
o f   t h e tenement for an in&ustr' or +orks +hi h ma' be arrie& on in a buil&ing or on a  pie e
of lan&8 an& +hih ten& &iretl' to meet the nee&s of the sai& in&ustr' or +orksssueEhether or not the
e"uipment ma' be &eeme& immovable +ithin the meaning of (rt 41-of the CC<el&o%ovable
e"uipment to be immobili:e& in ontemplation of la+ must first be essential an&prin ipal  elements of an
in&ustr' or +orks +ithout +hi h  su h  in&ustr' or +orks +oul&be unable to funtion  or arr'  on the in
&ustrial purpose for +hih  it +as establishe&T h e   t o o l s   a n &   e " u i p m e n t   i n   " u e s t i o n   i n   t h i s  
i n s t a n t   a s e   a r e 8   b '   t h e i r   n a t u r e 8   n o t essential an& prin i ple  muni ipal  element
s of petitioner2s business of transportingpassengers an& argoes b' motor tru ks  The'
are merel' in i&entals I a "uire& asmovables an& use& onl' for e.pe&ien ' to fa i litate
an&Jor improve its servi  e   ven +ithout suh tools an& e"uipment8 its business ma' be
arrie& on as +hen if its rollinge"uipment is repaire& or servie& in another shop belonging to
another (si&e from the element of essentialit' (rt 41- 9-; also re"uires that the in&ustr' or +orks be
arrie& on in a buil&ing or on a piee of lan& n the ase at bar the e"uipmentsin "uestion are &estine&
onl' to repair or servie the transportation business8 +hi h is not arrie& on in a buil&ing or
permanentl' on a piee of lan&8 as &eman&e& b' the la+<en  e8  the e"uipments in "uestion
are not absolutel' essential to the
petitioner2st r a n s p o r t a t i o n   b u s i n e s s 8   a n &   p e t i t i o n e r 2 s   b u s i n e s s   i s   n o t    a r r i e &  
o n   i n   a   b u i l & i n g 8 tenement or on a speifie& lan&8 so sai& e"uipment ma' not be onsi&ere& real
estate

ru(ential Bank vs Panis 1.3 SC* 3&-

5atsSpouses %agale seure& a loan +ith Pru&ential Bank  To further se ure sai& loan8
thespouses e.eute& a Real state %ortgage over the resi&ential buil&ing8 +ith a right
too  up' the lot  The Real  state %ortgage also in lu&e& information about the
SalesPatent applie& for b' the spouses for the lot to +hi h the buil&ing stoo&  The
spousesobtaine& a seon& loan8 +hih +as se ure& b' another Real state %ortgage over
thesame properties The Se of (griulture issue& a %is ellaneous Sales Patent over the lot
+hih +as then mortgage& to the bank in favor of the %aalesThe spouses &efaulte& on both loans
Thus8 the propert' +as e.traju&iiall' forelose&8 an& sol& in a publi aution9%isellaneous
Sales Patent R( )3, is an at permitting sale +ithout publi aution
of a l i e n a b l e   a n &   & i s p o s a b l e   l a n & s   o f   t h e   p u b l i    & o m a i n   f o r   r e s i & e n t i a l   p u r p o
s e    T h e appliation to purhase the lan& is alle& the %is ellaneous Sales (ppli ation
an& theorrespon&ing patent is alle& the %isellaneous Sales Patent;The RTC hel& that the Real
state %ortgage +as null an& voi&ssueEhether or not a vali& real estate mortgage an be
onstitute& on the buil&ing erete&on the lan& belonging to another<el&=esThe inlusion of ?
buil&ing? &istint an& separate from the lan& n the enumerationof properties un&er (rtile 41-
of the CC an onl' mean that the buil&ing itself is animmovable propert'

Tsai v. CAG.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 proceedi
ngs. 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, EVER
TEX 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 c
ontract.
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 ob
ligation 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
in
dication. 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 secu
re an obligation under the principle of estoppel.

6.MANARANGANDMANARANGV.OFILADAANDESTEBAN99SCRA108FACTS:
ManarangsecuredaloanfromEstebanguaranteedbyachattelmortgageoverahouseofmixedmaterials.Duetofailuretopaythechattelmortgagewas
foreclosed.Beforethesaleoftheproperty,Manarangtriedtopayforthepropertybutthesheriffrefusedtoaccepttenderunlessthereispaymentforthe
publicationofthenoticeofsaleinthenewspapers.ThispromptedManarangtobringthissuittocompelthesherifftoaccept

payment.Heaverredthatthepublicationwasunnecessaryasthehousesholdbeconsideredaspersonalpropertyperagreementinthechattelmortgage,
andthepublicationfornoticeofsaleisunnecessary
ISSUE:
Whether or not the fact that the parties entering into a contract regarding a house gavesaid property the
consideration of personal property in their contract.
HELD:
Yes.Thereisnoquestionthatabuildingofmixedmaterialsmaybeasubjectofchattelmortgage,inwhichcaseitisconsideredasbetweenthepartiesas
personalproperty.Themerefactthatahousewasthesubjectofchattelmortgageandwas
considered as personal property by the parties doesn‘t make the
saidhousepersonalpropertyforpurposesofthenoticetobegivenforitssaleinpublicauction.ItisrealpropertywithinthepurviewofRule39,Section16ofthe
RulesofCourtasithasbecomeapermanentfixtureontheland,whichisrealproperty.

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.” 15. Serg‘s Products and Gaquiloy vs. PCI Leasing and Finance 338
SCRA 499
 
FACTS:
 
PCI filed a case for collection of a sum of money as well as a writ of replevin
for theseizure of machineries, subject of a chattel mortgage executed by petitioner in favor of PCI.Machinerie
s of petitioner were seized and petitioner filed a motion for special protectiveorder. It asserts that the machineries
were real property and could not be subject of a chattelmortgage.Issue: Whether or not the machineries become
real property by virtue of immobilization.
 
HELD:
 
The machineries in question have become immobilized by destination because they areessential and principal
elements in the industry, and thus have become immovable in nature.Nonetheless, they are still proper
subjects for a chattel mortgage. Contracting parties mayvalidly stipulate that a real property be considered as
personal. After agreement, they areconsequently estopped from claiming otherwise.
 

Yap v. TanadaG.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 t
herefrom 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 defaul
t 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
ex
ecution 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 reconsideratio
n 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 se
parated 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 loo
sening the bolts or
dismantling the fasteners that were used to attach or install it in his house.

Leung Yee v. Strong Machinery Company37 Phil. 644

Facts:The "Compañia Agricola Filipina" bought a considerable quantity of rice-cleaning machinery
company from the defendant machinery company,and executed a chattel mortgage thereon to
secure payment of thepurchase price. It included in the mortgage deed the building of strong
materials in which the machinery was installed, without any reference tothe land on which it stood.
The indebtedness secured by this instrumentnot having been paid when it fell due, the mortgaged
property was sold bythe sheriff, in pursuance of the terms of the mortgage instrument. A fewweeks
thereafter, on or about the 14th of January, 1914, the "Compañia
Agricola Filipina" executed a deed of sale of the land upon which thebuilding stood to the
machinery company, but this deed of sale, althoughexecuted in a public document, was not
registered. The machinerycompany went into possession of the building at or about the time
whenthis sale took place, that is to say, the month of December, 1913, and ithas continued in
possession ever since. At or about the time when thechattel mortgage was executed in favor ofthe
machinery company, themortgagor, the "Compañia Agricola Filipina" executed anothermortgageto
the plaintiff upon the building, separate and apart from the land onwhich it stood. Upon the failure
of the mortgagor to pay the amount of theindebtedness secured by the mortgage, the plaintiff
secured judgment forthat amount, levied execution upon the building, bought it in at thesheriff's
sale on or about the 18th of December, 1914. This action wasinstituted by the plaintiff to recover
possession of the building from themachinery company. The trial judge gave judgment in favor of
themachinery company. Hence,this appeal.

Issue:Whether or not the trial judge erred in sustaining the machinery companyon the ground that
it had its title to the building registered prior to the dateof registry of plaintiff¶s certificate.

Held:We conclude that the ruling in favor of the machinery company cannot besustained on the
ground assigned by the trial judge. We are of opinion,however, that the judgment must be
sustained on the ground that theagreed statement of facts in the court below discloses that neither
thepurchase of the building by the plaintiff nor his inscription of the sheriff'scertificate of sale in his
favor was made in good faith, and that the
machinery company must be held to be the owner of the propertyArticle1544 of the New Civil
Code,it appearing that the company first tookpossession of the property; and further, that the
building and the land weresold to the machinery company long prior to the date of the sheriff's
saleto the plaintiff. But it appearing that he had full knowledge of themachinery company's claim of
ownership when he executed the indemnity
bond and bought in the property at the sheriff's sale, and it appearingfurther that the machinery
company's claim of ownership was wellfounded, he cannot be said to have been an innocent
purchaser for value.He took the risk and must stand by the consequences; and it is in thissense
that we find that he wasnot a purchaser in good faith. The decisionof the trial court is hereby
affirmed.
Leung Yee v. Strong Machinery Co.G.R. No. L-11658
DOCTRINE:The mere fact that the parties decided to deal with the buildingas 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:CompañiaAgricola 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, Compa
ñia 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
CivilCode; 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.
HELD:No. 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.

Bicerra v. TenezaG.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 diff
erent owner. But
once the house is demolished it ceases to exist, hence its character as an immovable likewise
ceases.
FACTS: The Bicerras were the owners of a house built on a lot owned by them andsituated in the municipality of
Lagangilang. Tenezza forcibly demolished the house,asserting that they are the rightful owners of
the land. Failureto restore the house and to deliver the materials by the defendants,plaintiffs were forced to
file an action against them for damages as well as praying that the courthold them as the proper
owners of the house. The court dismissed the case for lack of jurisdiction.
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. Whether or not the
house demolished is still considered an immovable property?

HELD:
No. A house is classified as immovable property by reason of its adherence to the soil on whichit is built. The
classification holds true regardless of the fact that the house may be situated onland belonging to another
owner. But once the house is demolished, it ceases to exist as suchand the hence its character as immovable
likewise ceases.House is immovable property even if situated on land belonging to a different owner;
Exception,
when demolished.

INSOLVENCY OF PAUL STROCHECKER V. RAMIREZ (GR 18700, 26 September 1922)

FACTS:

The half-interest in the business (Antigua Botica Ramirez) was mortgaged with Fidelity & Surety
Co. on 10 March 1919, and registered in due time in the registry of property, while another
mortgage was made with Ildefonso Ramirez on 22 September 1919 and registered also in the
registry. Raised in the lower court, the trial court declared the mortgage of Fidelity & Surety Co.
entitled to preference over that of Ildefonso Ramirez and another mortgage by Concepcion Ayala.
Ayala did not appeal, but Ramirez did.
ISSUE:

Whether or not half-interest over a business is a movable property

RULING: Yes.

1. Interest in business may be subject of mortgage With regard to the nature of the property
mortgaged which is one-half interest in the business, such interest is a personal property capable
of appropriation and not included in the enumeration of real properties in articles 335 of the Civil
Code, and may be the subject of mortgage. All personal property may be mortgaged. (Sec. 7, Act
1508.)

2. Description of mortgage property sufficient The description contained in the document is

sufficient. The law (sec. 7, Act 1508) requires only a description of the mortgaged property shall be
such as to enable the parties to the mortgage, or any other person, after reasonable inquiry and
investigation, to identify the same. In the case at bar, “his half interest in the drug business known
as Antigua Botica Ramirez, located at Calle Real Nos. 123 and 125, District of Intramuros, Manila
Philippine Islands" is sufficient.

3. Article 1922 (1-3) of the Civil Code applicable only to mortgage property in possession Numbers
1, 2, and 3 of the article 1922 of the Civil Code are not applicable as neither the debtor, nor
himself, is in possession of the property mortgaged, which is, and since the registration of the
mortgage has been, legally in possession of the surety company

4. Stipulation about personal property not a mortgage upon property - In no way can the mortgage
executed be given effect as of the date of the sale of the store in question; as there was a mere
stipulation about personal security during said date, but not a mortgage upon property, and much
less upon the property in question.
Evangelista v. Alto Surety
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

Burgos vs. Chief of Staff

G.R. No. L-64261, December 26, 1984, 133 SCRA 800

FACTS:

On December 7, 1982, respondent judge issued two [2] search warrants to "Metropolitan Mail" and
"We Forum" newspapers.

During the search, the office and printing machines, equipment, paraphernalia, motor vehicles and
other articles used in the printing, publication and distribution of the said newspapers, as well as
numerous papers, documents, books and other written literature alleged to be in the possession
and control of petitioner Jose Burgos, Jr. publisher-editor of the "We Forum" newspaper, were
seized.

Petitioners pray to nullify the search warrants in question.

Respondent:

1. Respondents contend that petitioners should have filed a motion to quash said warrants in
the court that issued them before impugning the validity of the same before this Court.
2. Respondents also assail the petition on the ground of laches (failure or negligence for an
unreasonable and unexplained length of time to do that which, by exercising due diligence,
could or should have been done earlier. It is negligence or omission to assert a right within
a reasonable time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it.)
3. Respondents also submit the theory that since petitioner Jose Burgos, Jr. had used and
marked as evidence some of the seized documents, he is now estopped from challenging
the validity of the search warrants. 
4. Respondents also invoked Section 8 of Presidential Decree No. 885 to justify the
continued sealing of the printing machines, "the sequestration of the property of any person,
natural or artificial, engaged in subversive activities against the government and its duly
constituted authorities ... in accordance with implementing rules and regulations as may be
issued by the Secretary of National Defense."

Petitioners:
 1. Petitioners alleged that respondent Judge failed to conduct an examination under oath or
affirmation of the applicant and his witnesses, as mandated by the above-quoted
constitutional provision as wen as Sec. 4, Rule 126 of the Rules of Court. 
2. The two search warrants pinpointed only one place where petitioner Jose Burgos, Jr. was
allegedly keeping and concealing the articles listed therein.
3. Articles belonging to his co-petitioners - Jose Burgos, Sr., Bayani Soriano and the J. Burgos
Media Services, Inc. were also seized although the warrants were directed against Jose
Burgos, Jr. alone.
4. Real properties were seized.
5. The documents and Joint Affidavit presented to respondent Judge prior to the filing of the
search warrants could not have provided sufficient basis for the finding of a probable cause
upon which a warrant may validly issue in accordance with Section 3, Article IV of the 1973
Constitution which provides,

 SEC. 3. ... and no search warrant or warrant of arrest shall issue except upon
probable cause to be determined by the judge, or such other responsible
officer as may be authorized by law, after examination under oath or
affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the persons or things to
be seized.
ISSUE:

Whether or not the two search warrants were valid.

Read: People vs. Gerente

HELD:

No.

Quashal of Warrants - The Court takes cognizance of this petition in view of the seriousness and
urgency of the constitutional Issue raised, not to mention the public interest generated by the
search of the "We Forum" offices which was televised in Channel 7 and widely publicized in all
metropolitan dailies.

The existence of this special circumstance justifies this Court to exercise its inherent power to
suspend its rules.

With the contention pertaining to laches, the petitioners gave an explanation evidencing that they
have exhausted other extra-judicial efforts to remedy the situation, negating the presumption that
they have abandoned their right to the possession of the seized property.

PD 885 - It is doubtful however, if sequestration could validly be effected in view of the absence of
any implementing rules and regulations promulgated by the Minister of National Defense.

Besides, President Marcos himself denied the request of the military authorities to sequester the
property seized from petitioners.

Ruling regarding the enumerated reasons by the petitioners:

1. This objection may properly be considered moot and academic, as petitioners themselves
conceded during the hearing on August 9, 1983, that an examination had indeed been
conducted by respondent judge of Col. Abadilla and his witnesses.
 2. The defect pointed out is obviously a typographical error. Precisely, two search warrants
were applied for and issued because the purpose and intent were to search two distinct
premises. It would be quite absurd and illogical for respondent judge to have issued two
warrants intended for one and the same place.
3. Section 2, Rule 126, of the Rules of Court, does not require that the property to be seized
should be owned by the person against whom the search warrant is directed. It may or may
not be owned by him.
4. Petitioners do not claim to be the owners of the land and/or building on which the
machineries were placed.

This being the case, the machineries in question, while in fact bolted to the ground, remain
movable property susceptible to seizure under a search warrant. The broad statements in the
application and joint affidavit are mere conclusions of law and does not satisfy the requirements of
probable cause. Deficient of such particulars as would justify a finding of the existence of probable
cause, said allegation cannot serve as basis for the issuance of a search warrant and it was a
grave error for respondent judge to have done so. In Alvarez v. Court of First Instance, this Court
ruled that "the oath required must refer to the truth of the facts within the personal knowledge of
the petitioner or his witnesses, because the purpose thereof is to convince the committing
magistrate, not the individual making the affidavit and seeking the issuance of the warrant, of the
existence of probable cause." Another factor which makes the search warrants under
consideration constitutionally objectionable is that they are in the nature of general warrants. The
description of the articles sought to be seized under the search warrants in question are too
general. Therefore, the two search warrants issued by respondent Judge on are hereby
declared null and void.

The prayer for a writ of mandatory injunction for the return of the seized articles is hereby granted
and all articles seized are hereby ordered released to petitioners.

Jose Burgos vs. Chief of Staff

G.R. No L-64261
December 26, 1984

Facts:

Two warrants were issued against petitioners for the search on the premises of “Metropolitan Mail”
and “We Forum” newspapers and the seizure of items alleged to have been used in subversive
activities. Petitioners prayed that a writ of preliminary mandatory and prohibitory injunction be
issued for the return of the seized articles, and that respondents be enjoined from using the
articles thus seized as evidence against petitioner.

Petitioners questioned the warrants for the lack of probable cause and that the two warrants
issued indicated only one and the same address. In addition, the items seized subject to the
warrant were real properties.

 Issue: Whether or not the two warrants were valid to justify seizure of the items.

 Held:

The defect in the indication of the same address in the two warrants was held by the court as a
typographical error and immaterial in view of the correct determination of the place sought to be
searched set forth in the application. The purpose and intent to search two distinct premises was
evident in the issuance of the two warrant.

As to the issue that the  items seized were real properties, the court applied the principle in the
case of Davao Sawmill Co. v. Castillo, ruling “that machinery which is movable by nature becomes
immobilized when placed by the owner of the tenement, property or plant, but not so when placed
by a tenant, usufructuary, or any other person having only a temporary right, unless such person
acted as the agent of the owner.” In the case at bar, petitioners did not claim to be the owners of
the land and/or building on which the machineries were placed. This being the case, the
machineries in question, while in fact bolted to the ground remain movable property susceptible to
seizure under a search warrant.

However, the Court declared the two warrants null and void.

MANILA ELECTRIC COMPANY v. CITY ASSESSOR, GR No. 166102, 2015-08-05

Facts:
MERALCO is a private corporation organized and existing under Philippine laws to operate as a
public utility engaged in electric distribution.
MERALCO received from the City Assessor of Lucena a copy of Tax Declaration No. 019-
6500[13] covering the following electric facilities, classified as capital investment, of the company:
(a) transformer and electric post; (b)... transmission line; (c) insulator; and (d) electric meter,
located in Quezon Ave. Ext., Brgy. Gulang-Gulang, Lucena City. Under Tax Declaration No. 019-
6500, these electric facilities had a market value of P81,811,000.00 and an assessed value of
P65,448,800.00, and were subjected... to real property tax as of 1985.
MERALCO claimed that its capital investment consisted only of its substation facilities, the true
and correct value of which was only P9,454,400.00; and that
MERALCO was exempted from payment of real property tax on said substation facilities.
Issues:
whether or not the poles, wires, insulators, transformers, and electric meters of MERALCO were
real properties
Ruling:
LBAA cited the 1964 case of Board of Assessment Appeals v. Manila Electric
Company[16] (1964 MERALCO case) in which the Court held that: (1) the steel towers fell within
the term "poles" expressly exempted from taxes under the franchise of MERALCO; and (2) the
steel towers were personal properties under the provisions... of the Civil Code and, hence, not
subject to real property tax. The LBAA lastly ordered that Tax Declaration No. 019-6500 would
remain and the poles, wires, insulators, transformers, and electric meters of MERALCO would be
continuously assessed, but the City Assessor would stamp... on the said Tax Declaration the word
"exempt.
Board overrules the claim of the [City Assessor of Lucena] and sustain the claim of [MERALCO].
Appellant (Meralco) is hereby ordered to render an accounting to the City Treasurer of Lucena and
to pay the City Government of Lucena the amount corresponding to the Five (5%) per centum of
the gross earnings in compliance with paragraph 13 both Resolutions 108 and
2679, respectively, retroactive from November 9, 1957 to date, if said tax has not yet been paid.
"es *er2, I*&. v. Prov'*&e o: %a(a*2as, e( a.G.R. No. 187DOCTRIN!
 *rticle +5? >  @ of the %ew Civil Code provides that 8doc!s and structures
which,though floating, are intended by their nature and ob0ect to remain at a fi$ed
place on a river,

 
la!e, or coast9 are considered immovable property. #hus, power barges are
categorized asimmovable property by destination, being in the nature of machinery
and other implementsintended by the owner for an industry or wor! which may be
carried on in a building or on apiece of land and which tend directly to meet the needs of said
industry or wor!. 
"ACTS!
  n Banuary 5  , 5  7, %ational "ower Corporation >%"C@ entered into a lease
contract with" o l a r D n e r g y , ) n c . o v e r 7 O 7 ; 4 1 d i e s e l e n g i n e p o w e r b a r g e s
m o o r e d a t A a l a y a n A a y i n Calaca, Aatangas. #he contract, denominated as an Dnergy
Conversion *greement, was for aperiod of five years. *rticle 5; states that %"C shall be
responsible for the payment of ta$es.> o t h e r t h a n > i @ t a $ e s i m p o s e d o r
c a l c u l a t e d o n t h e b a s i s o f t h e n e t i n c o m e o f "  L * < a n d "ersonal )ncome #a$es of
its employees and >ii@ construction permit fees, environmental permitf e e s a n d o t h e r s i m i l a r
f e e s a n d c h a r g e s . " o l a r D n e r g y t h e n a s s i g n e d i t s r i g h t s u n d e r t h e  *greement to
Fels despite %"Cs initial opposition. F D L S r e c e i v e d a n a s s e s s m e n t o f r e a l p r o p e r t y
t a $ e s o n t h e p o w e r b a r g e s f r o m " r o v i n c i a l  *ssessor Lauro C. *ndaya of Aatangas City.
FDLS referred the matter to %"C, reminding it of its obligation under the *greement to pay all real
estate ta$es. )t then gave %"C the full power and authority to represent it in any conference
regarding the real property assessment of the "rovincial *ssessor. %"C filed a petition with
the Local Aoard *ssessment *ppeals >LA**@. #heLA** ordered Fels to pay the real estate ta$es.
#he LA** ruled that the power plant facilities,while they may be classified as movable or personal
property, are nevertheless considered realproperty for ta$ation purposes because they are
installed at a specific location with a character o f p e r m a n e n c y . # h e L A * * a l s o p o i n t e d
o u t t h a t t h e o w n e r o f t h e b a r g e s P F D L S , a p r i v a t e corporationPis the one being
ta$ed, not %"C. * mere agreement ma!ing %"C responsible for the payment of all real
estate ta$es and assessments will not 0ustify the e$emption of FDLS' such a privilege
can only be granted to %"C and cannot be e$tended to FDLS. Finally, the LA**also ruled that the
petition was filed out of time.Fels appealed to the Central Aoard *ssessment *ppeals >CA**@. #he
CA** reversed and ruledthat the power barges belong to %"C' since they are actually, directly and
e$clusively used by it,the power barges are covered by the e$emptions under Section 67+>c@ of
<.*. %o. 5;. *s tothe other 0urisdictional issue, the CA** ruled that prescription did not
preclude the %"C frompursuing its claim for ta$ e$emption in accordance with Section 6; of
<.*. %o. 5;. Kpon 4<,the CA** reversed itself. 
ISS#!
 1hether or not barges are considered as real property, thus can be sub0ect to
realproperty ta$ -- IDS 
$LD!
#he CA** and LA** power barges are real property and are thus sub0ect to real property ta$. )n
Consolidated Ddison Company of %ew Ior!, )nc., et al. v. #he City of %ew Ior!, et al.,
apower company brought an action to review property ta$ assessment. n the city s
motion todismiss, the Supreme Court of %ew Ior! held that the barges on which were
mounted gasturbine power plants designated to generate electrical power, the fuel oil barges
which suppliedfuel oil to the power plant barges, and the accessory e=uipment mounted
on the barges weresub0ect to real property ta$ation. 4oreover, *rticle +5? >  @ of the
%ew Civil Code provides that 8doc!s and structures which,though floating, are
intended by their nature and ob0ect to remain at a fi$ed place on a river,

 
la!e, or coast9 are considered immovable property. #hus, power barges are
categorized asimmovable property by destination, being in the nature of machinery
and other implementsintended by the owner for an industry or wor! which may be
carried on in a building or on apiece of land and which tend directly to meet the needs of said
industry or wor!.
CAPITOL WIRELESS v. PROVINCIAL TREASURER OF BATANGAS, GR No. 180110, 2016-05-30
Facts:
Petitioner Capitol Wireless Inc. (Capwire) is a Philippine corporation in the business of providing
international telecommunications services.[3] As such provider, Capwire has signed agreements with other
local and foreign telecommunications companies covering an international network of submarine cable
systems such as the Asia Pacific Cable Network System (APCN) (which connects Australia, Thailand,
Malaysia, Singapore, Hong Kong, Taiwan, Korea, Japan, Indonesia and the Philippines); the Brunei-
Malaysia-Philippines Cable Network System (BMP-CNS), the Philippines-Italy (SEA-ME-WE-3 CNS), and
the Guam Philippines (GP-CNS) systems.[4] The agreements provide for co-ownership and other rights
among the parties over the network.[5]
Petitioner Capwire claims that it is co-owner only of the so-called "Wet Segment" of the APCN, while the
landing stations or terminals and Segment E of APCN located in Nasugbu, Batangas are allegedly owned
by the Philippine Long Distance Telephone Corporation (PLDT).[6] Moreover, it alleges that the Wet
Segment is laid in international, and not Philippine, waters.[7]
Capwire claims that as co-owner, it does not own any particular physical part of the cable system but,
consistent with its financial contributions, it owns the right to use a certain capacity of the said system.[8]
This property right is allegedly reported in its financial books as "Indefeasible Rights in Cable Systems.
However, for loan restructuring purposes, Capwire claims that "it was required to register the value of its
right," hence, it engaged an appraiser to "assess the market value of the international submarine cable
system and the cost to Capwire."[
Alter the filing of the public respondents' Comment,[16] on May 5, 2003, the RTC issued an Order
dismissing the petition for failure of the petitioner Capwire to follow the requisite of payment under protest
as well as failure to appeal to the Local Board of Assessment Appeals (LBAA), as provided for in Sections
206 and 226 of Republic Act (R.A.) No. 7160, or the Local Government Code.[17]
Issues:
May submarine communications cables be classified as taxable real property by the local governments?...
whether submarine wires or cables used for communications may be taxed like other real estate.
Ruling:
The petition is denied. No error attended the ruling of the appellate court that the case involves factual
questions that should have been resolved before the appropriate administrative bodies.
We hold in the affirmative.
Principles:
Submarine or undersea communications cables are akin to electric transmission lines which this Court has
recently declared in Manila Electric Company v. City Assessor and City Treasurer of Lucena City,[37] as
"no longer exempted from real property tax" and may qualify as "machinery" subject to real property tax
under the Local Government Code. To the extent that the equipment's location is determinable to be within
the taxing authority's jurisdiction, the Court sees no reason to distinguish between submarine cables used
for communications and aerial or underground wires or lines used for electric transmission, so that both
pieces of property do not merit a different treatment in the aspect of real property taxation. Both electric
lines and communications cables, in the strictest sense, are not directly adhered to the soil but pass
through posts, relays or landing stations, but both may be classified under the term "machinery" as real
property under Article 415(5)[38] of the Civil Code for the simple reason that such pieces of equipment
serve the owner's business or tend to meet the needs of his industry or works that are on real estate. Even
objects in or on a body of water may be classified as such, as "waters" is classified as an immovable under
Article 415(8)[39] of the Code. A classic example is a boathouse which, by its nature, is a vessel and,
therefore, a personal property but, if it is tied to the shore and used as a residence, and since it floats on
waters which is immovable, is considered real property.[40] Besides, the Court has already held that "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."[41]Thus, absent any showing from Capwire of any
express grant of an exemption for its lines and cables from real property taxation, then this interpretation
applies and Capwire's submarine cable may be held subject to real property tax.Having determined that
Capwire is liable, and public respondents have the right to impose a real property tax on its submarine
cable, the issue that is unresolved is how much of such cable is taxable based on the extent of Capwire's
ownership or co-ownership of it and the length that is laid within respondents' taxing jurisdiction. The
matter, however, requires a factual determination that is best performed by the Local and Central Boards of
Assessment Appeals, a remedy which the petitioner did not avail of.At any rate, given the importance of the
issue, it is proper to lay down the other legal bases for the local taxing authorities' power to tax portions of
the submarine cables of petitioner. It is not in dispute that the submarine cable system's Landing Station in
Nasugbu, Batangas is owned by PLDT and not by Capwire. Obviously, Capwire is not liable for the real
property tax on this Landing Station. Nonetheless, Capwire admits that it co-owns the submarine cable
system that is subject of the tax assessed and being collected by public respondents. As the Court takes
judicial notice that Nasugbu is a coastal town and the surrounding sea falls within what the United Nations
Convention on the Law of the Sea (UNCLOS) would define as the country's territorial sea (to the extent of
12 nautical miles outward from the nearest baseline, under Part II, Sections 1 and 2) over which the country
has sovereignty, including the seabed and subsoil, it follows that indeed a portion of the submarine cable
system lies within Philippine territory and thus falls within the jurisdiction of the said local taxing authorities.
[42] It easily belies Capwire's contention that the cable system is entirely in international waters. And even if
such portion does not lie in the 12-nautical-mile vicinity of the territorial sea but further inward, in Prof.
Magallona v. Hon. Ermita, et al.[43] this Court held that "whether referred to as Philippine 'internal waters'
under Article I of the Constitution[44] or as 'archipelagic waters' under UNCLOS Part III, Article 49(1, 2, 4),
[45] the Philippines exercises sovereignty over the body of water lying landward of (its) baselines, including
the air space over it and the submarine areas underneath." Further, under Part VI, Article 79[46] of the
UNCLOS, the Philippines clearly has jurisdiction with respect to cables laid in its territory that are utilized in
support of other installations and structures under its jurisdiction.And as far as local government units are
concerned, the areas described above are to be considered subsumed under the term "municipal waters"
which, under the Local Government Code, includes "not only streams, lakes, and tidal waters within the
municipality, not being the subject of private ownership and not comprised within the national parks, public
forest, timber lands, forest reserves or fishery reserves, but also marine waters included between two lines
drawn perpendicularly to the general coastline from points where the boundary lines of the municipality or
city touch the sea at low tide and a third line parallel with the general coastline and fifteen (15) kilometers
from it."[47] Although the term "municipal waters" appears in the Code in the context of the grant of
quarrying and fisheries privileges for a fee by local governments,[48] its inclusion in the Code's Book II
which covers local taxation means that it may also apply as guide in determining the territorial extent of the
local authorities' power to levy real property taxation.Thus, the jurisdiction or authority over such part of the
subject submarine cable system lying within Philippine jurisdiction includes the authority to tax the same,
for taxation is one of the three basic and necessary attributes of sovereignty,[49] and such authority has
been delegated by the national legislature to the local governments with respect to real property taxation.
[50]As earlier stated, a way for Capwire to claim that its cable system is not covered by such authority is by
showing a domestic enactment or even contract, or an international agreement or treaty exempting the
same from real property taxation. It failed to do so, however, despite the fact that the burden of proving
exemption from local taxation is upon whom the subject real property is declared.[51] Under the Local
Government Code, every person by or for whom real property is declared, who shall claim tax exemption
for such property from real property taxation "shall file with the provincial, city or municipal assessor within
thirty (30) days from the date of the declaration of real property sufficient documentary evidence in support
of such claim."[52] Capwire omitted to do so. And even under Capwire's legislative franchise, RA 4387,
which amended RA 2037, where it may be derived that there was a grant of real property tax exemption for
properties that are part of its franchise, or directly meet the needs of its business,[53] such had been
expressly withdrawn by the Local Government Code, which took effect on January 1, 1992, Sections 193
and 234 of which provide:[54]

G.R. No. L-7057. October 29, 1954.

 
Concepcion, J.:
 
Doctrine: Said machinery and equipment were "intended by the owner of thetenement for an industry"
carried on said immovable and tended "directly to meetthe needs of said industry." For these reasons, they
were already immovablepursuant to paragraph 3 and 5 of Article 415 of Civil Code.
 
Facts: Petitioner filed a complaint for replevin in the CFI of Manila against IpoLimestone Co., Inc. and Dr.
Antonio Villarama for the recovery of the machineriesand equipments sold and delivered to defendants
at their factory in Bigti,Norzagaray, Bulacan. Respondent judge issued order for Provincial Sheriff to
seizeand take immediate possession of the properties. But the equipment could notpossibly be dismantled
without causing damage to the wooden frames attached tothem. As Roco, pet's president, insisted in
dismantling it on his own responsibility,alleging that bond was posted for such, the deputy sheriffs directed
that some ofthe supports thereof be cut. Defendant filed counter-bond. Trial court orderedreturn and
reinstallation of machineries. Petitioner deposited them along the road,near the quarry of the defendant
without reinstallation rendering them useless.Petitioner complains that the respondent Judge had
disregarded his manifestationthat equipments seized are the Petitioner's property until fully paid for and
assuch never became immovable and ordinarily replevin may be brought to recoverany specific personal
property unlawfully taken or detained from the ownerthereof, provided such property is capable of
identification and delivery; butreplevin will not lie for the recovery of real property or incorporeal
personalproperty.
 
Issue: W/N the equipment can be seized by the sheriff?
A motion for reconsideration of this decision of the Court of Appeals having been denied, petitioner has
brought the case to Us for review by writ of certiorari. Upon examination of the record, We are satisfied,
however, that the Court of Appeals was justified in dismissing the case. The special civil action known as
replevin, governed by Rule 62 of the Rules of Court, is applicable only to "personal property".
"Ordinarily replevin may be brought to recover any specific personal property unlawfully
taken or detained from the owner thereof, provided such, property is capable of identification
and delivery; but replevin will not lie for the recovery of real property or incorporeal personal
property". (77 C. J. S. 17) (Italics supplied.)
When the sheriff repaired to the premises of respondent, Ipo Limestone Co., Inc., 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 "directly to meet the needs of the said industry." 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.
"In so far as an article, including a fixture annexed by a tenant, is regarded as part of the
realty, it is not the subject of trover, replevin, detinus, or any action lying only for personalty;
* * *.
"* * * the action of replevin does not lie for articles so annexed to the realty as to be part
thereof, as, for example, a house or a turbine pump constituting part of a building's cooling
system; * * *" (36 C.J.S. 1000 & 1001)
Lastly, although the parties have not cited, and We have not found, any authority squarely in point obviously
because real property are not subject to replevin it is well settled that, when the restitution of what has been
ordered, the goods in question shall be returned in substantially the same condition as when taken (54 C.J.,
590-600, 640-641). Inasmuch as the machinery and equipment involved in this case were duly installed and
affixed in the premises of respondent company when petitioner's representative caused said property to be
dismantled and then removed, it follows that petitioner must also do everything necessary to the re-
installation of said property in conformity with its original condition.
Wherefore, the decision of the Court of Appeals is hereby affirmed, with costs against the petitioner. So
ordered.