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circulation was made making the execution sale Ladera, et. al. vs. Hodges, et. al. , O.

G No. void and conferred no title to the purchaser. Furthermore, there was a valid exercise of 8027-R, September 23, 1952 redemption. So, at the time Magno sold the property to Villa, Magno no longer had title over Facts: Paz G. Ladera entered into a contract the property strengthening the fact that since with C.N Hodges, whereby the latter promised to there was no title, the subsequent sale was null sell a parced of land to the former subject to the and void. stipulation of the contract saying that the failure of the purchaser to pay within sixty days after it fell due would render the contract annulled or PROPERTY - Gavino A. Tumalad and rescinded. Furthermore, it is likewise stipulated Generosa R. Tumalad, vs. Alberta Vicencio that the sums of money paid under the contract and Eliliano Simeon G.R. No. L-30173, would be considered rentals and the owner September 30, 1971, 41 SCRA 143 would be at liberty to dispose of the said lands with all its improvements to other persons as if this contract had never been made. After the execution of the contract, Ladera built a house Facts: The defendants, Alberta Vicencio and on the lot. Upon her failure to pay, Hodges filed Emiliano Simeon, executed a Chattel Mortgage an action for ejectment. The court decided that of their house of strong materials in favor to Ladera is to vacate and surrender possession of plaintiff, Gavino A. Tumalad and Generosa R. the lot. Also, on that day, Ladera paid Hodges Tumalad. Defendants house was erected on the P188.50 which the latter recorded as rental land of Madrigal and Company, Inc. It was payment. A writ of execution was then issued agreed that in default of payment of any and the City Sheriff levied upon all rights, amortizations, shall cause the entire debt interest and participation over the house. The become immediately due and demandable. Sheriff then sold the house to Avelina A. Magno who in turn sold the house to Manuela Villa. But Upon default, the mortgage was extra judicially this transaction was not recorded. Upon foreclosed in favor of the plaintiff as the highest knowledge of this, Ladera went to see the bidder. As such, plaintiffs commenced a civil Sheriff and paid him to redeem the property but actions praying that the house be vacated and was received as rental payment. This amount, for the possession of the property. Obtaining a however, was not turned over to Hodges. favorable judgment thereto, they moved for its execution. However, the judgment of possession cannot be executed for reason that the house Issue: Whether or not the house built on a land was already torn down. owned by another person, should be regarded in law as movable or personal property. Issue: Whether or not, the subject matter of the mortgage, a house of strong materials, be the Held: No. The sale of the land was not made object of a chattel mortgage? without the proper publication required by law of the sale of immovable property. In this instance, the determination of whether or not the house in dispute is an immovable or movable property is Ruling: Held that even though the inclusion in vital. The undisputed rule is whether it is the Article 415, par. 1 of the Civil Code, of a immovable by destination (place by the owner building separate and distinct from land, means of the tenement), an immovable by that the building is by itself an immovable, incorporation (attachment not necessarily made however it admits an exceptions. As in the case by the owner of the tenement) or an accession. at bar, though there was no express provision A true building is an immovable or real property referring to the house as immovable, whether the owner of the land is a usufructuary nevertheless, by selling or transferring a house or lessee erects it. Moreover, when Ladera built by way of chattel mortgage, the house is treated the house in question, she was not a mere as a chattel. Moreover, the house stood on a lessee but occupied the land under a valid rented land giving the defendant a temporary contract with Hodges to sell it to her. Thus, the right as lessee. As such, it did not form part of object of the levy and the sale was real property. the land. Though this distinction alone, cannot The publication in a newspaper in a general per se determine the nature of the property, it

does when so combined with other factors, as The Compania Agricola Filipina (CAF) when the parties intended to treat the house as bought rice-cleaning machines from personal property. Strong MachineryCompany (SMC). These machines were installed in one of the CAFs buildings, which was madeout of strong materials. A chattel mortgage was executed to PROPERTY - Standard Oil Company of New secure payment of the purchase York vs. Jaranillo, G.R. No. 20329 - March p r i c e . T h e c h a t t e l mortgage included the 16, 1923, 44 Phil. 630 building and the machines; the land on which it Facts: Gervasia dela Rosa, Vda, de Vera, was stood was not included.When CAF failed to pay the lessee of a piece of land located in Manila. A their debt, the property was sold by the sheriff house of strong materials was erected thereon. and the same was boughtb y S M C . T h e was re giste re d in the On November 27, 1922 she executed a m o r t g a g e document in the form of a chattel mortgage, c h a t t e l m o r t g a g e r e g i s t r y a n d t h e purporting to convey to the petitioner, Standard s a l e o f t h e property to SMC was annotated on Oil Company of New York, by way of mortgage, the same registry on December 29, 1913. On both the leasehold interest to the land and the January 14, 1913, CAF executed a deed of sale building which stands thereon. However, upon of the land, where the building stood, to presentation of the document to respondent, SMC. The sale was in the form of a public Juaquin Jaranillo, as Register of Deeds of Manila, instrument, but the same was not registered. refused to register the chattel mortgage, SMC went intopossession of the building at or contending that the nature of the property is not about the same time when the sale took place.A t o r a b o u t t h e s a m e t i m e w h e n a personal property, but a real property. the cha tte l mo rtg age was exe cute d in favor of SMC, C A F executed another Issue: Whether or Not, the Register of Deeds, mortgage to herein plaintiff (Leung Yee) upon Jaranillo, has the authority to deny the the building to secure paymentof the balance of registration of the document purporting to be a its indebtedness. Upon CAFs failure to pay, chattel mortgage executed in the manner and Leung Yee secured judgment forthe amount form prescribed by the chattel Mortgage law? and levied execution upon the building, bought it at the sheriffs sale on or aboutD e c 18, 1914 and had the certificate of sale duly Ruling: Held that, the duties of the Register of s h e r i f f s in the land re gist ry deeds are of purely ministerial in character. r e g i s t e r e d At the time of the There is no legal provision conferring upon him o f Cavite. SMC, who was in any judicial or quasi-judicial authority to e x e c u t i o n , determine the nature of the document p o s s e s s i o n , f i l e d w i t h t h e s h e r i f f presented to him for record. The said property a s w o r n statement setting up its claim of title may be considered as personal property by and demanding the release of the property from agreement of the parties, though it may be well the levy.Accordingly, an action to recover considered as real property. Moreover, the possession of the building was filed by Leung parties to a contract may by agreement treat as Yee. RTC ruled infavor of SMC on the ground that personal property that which by nature would be the company had its title to the building real property, as long as no third person would registered prior to thedate of the registry of be prejudiced thereby. Jaranillo should therefore Leung Yees certificate. Thus, this appeal. accept the legal fees being tendered and place Issue: Who has a better right to the property? the document on record. Ruling: RTC ruling in favor of SMC is affirmed; ground modified. G.R. No. L -11658 (February 15, 1918) LEUNG YEE MACHINERY WILLIAMSON Facts: vs. FRANK COMPANY Ratio Decidendi: The building made out of L. STRONG strong materials is real property. The mere fact and J.G. that the parties dealt w i t h i t a s s e p a r a t e and apart from the land (or as personal property) does not change i t s character as real property. In this case, it follows that neither the original registry in the

chattel mortgage of the building and the machinery installed therein, nor the annotation in the registry of the sale of the mortgaged property had any legal effect. However, since the facts disclose that the purchase by Leung Yee and the inscription on the sheriffs certificate of sale were not made in good faith, it must be held that SMC is the owner of the property pursuant to the third (3rd) paragraph of Article 1473 of the NCC, should there be no entry, the property shall belong to the person who first took possession of it in good faith, andin the absence thereof, to the person who presents the oldest title, provided there is good faith.

pendency of Yaps motion, suspension of sale was directed by Judge Tanada. It appears, however, that this was not made known to the Sheriff whocontinued with the auction sale and sold the property to the highest bidder, Goulds. Because of such, petitioner filed a Motion to Set Aside Execution Sale and to Quash Alias Writ of Execution. One of his arguments was that the sale was made without the notice required by Sec. 18, Rule 29 of the New Rules of Court, i.e. notice by publication in case of execution of sale of real property, the pump and its accessories being immovable because attached to the ground with the character of permanency. Such motion was denied by the CFI. Issue: Whether or not the pump and its accessories are immovable property

Julian S. Yap vs. Hon. Santiago O. Taada and Held: No. The water pump and its accessories Goulds Pumps International (Phil), Inc., are NOT immovable properties. The argument of Yap that the water pump had become G.R. No. L-32917, July 18, 1988 immovable property by its being installed in his residence is untenable. Article 415, par. 3 of the Civil Code considers and immovable property as Doctrine: Article 415, par. 3 of the Civil Code everything attached to an immovable in a fixed considers and immovable property as manner, in such a way that it cannot be everything attached to an immovable in a fixed separated therefrom without breaking the manner, in such a way that it cannot be material or deteriorating the object. The pump separated therefrom without breaking the does not fit this description. It could be, and material or deteriorating the object. The pump was, in fact,separated from Yaps premises does not fit this description. It could be, and without being broken of suffering deterioration. was, in fact,separated from Yaps premises Obviously, the separation or removal of the without being broken of suffering deterioration. pump involved nothing more complicated that Obviously, the separation or removal of the the loosening of bolts or dismantling of other pump involved nothing more complicated that fasteners. the loosening of bolts or dismantling of other fasteners. Burgos, Sr. vs. Chief of Staff Facts: The case began in the City Court of Cebu with the filing of Goulds Pumps International (Phil), Inc. of a complaint against Yap and his wife seeking recovery of P1,459.30, representing the balance of the price and installation cost of a water pump in the latters premises. The Court rendered judgment in favor of herein respondent after they presented evidence ex-parte due to failure of petitioner Yap to appear before the Court. Petitioner then appealed to the CFI, particularly to the sale of Judge Tanada. For again failure to appear for pre-trial, Yap was declared in default. He filed for a motion for reconsideration which was denied by Judge Tanada. On October 15, 1969, Tanada granted Goulds Motion for Issuance of Writ of Execution. Yap forthwith filed an Urgent Motion for Reconsideration of the said Order. In the meantime, the Sheriff levied on the water pump in question and by notice scheduled the execution sale thereof. But in view of the G.R. L-64261. December 26, 1984 Doctrine: A 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 temporary right, unless such person acted as the agent of the owner. Facts: Armed with a search warrant issued by the Court of First Instance of Rizal, law enforcement officers searched the offices of the We forum and Metropolitan Mail newspapers. During the course of the search, the law enforcement officers seized office and printing machines, equipment, paraphernalia and several other materials used in the distribution of newspapers. Petitioner avers,

among others, that the seizure of the properties mentioned above amounts to seizure of real properties, which cannot be validly conducted under the strength of a search warrant. It must be noted that real properties are not susceptible of confiscation under a search warrant. Hence this appeal which assails the validity of the search and the seizure of the properties of the petitioner. Issue: Whether there is merit in the petitioners assertion that real property were invalidly seized under the disputed warrants. Held: No. The petitioners assertion does not hold water. Under Article 415(5) of the civil code, 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 are considered immovable property. In another case decided by the Court, in which the abovementioned legal provision was invoked, it was ruled 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 temporary right, unless such person acted as the agent of the owner. In the case at bar, 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 remains movable property susceptible to seizure under a search warrant.

assessment as real estate for purposes of the real estate tax. Facts: Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioners equipment in its repair or service shop. Petitioner appealed the assessment to the respondent Board of Tax Appeals on the ground that the same are not realty. The Board of Tax Appeals of the City sustained the city assessor, so petitioner herein filed with the Court of Tax Appeals a petition for the review of the assessment. The Court of Tax Appeals having sustained the respondent city assessors ruling, and having denied a motion for reconsideration, petitioner brought the case to this Court. Issue: Whether the Tax Court erred in its interpretation of paragraph 5 of Article 415 of the New Civil Code, and holding that pursuant thereto, the movable equipments are taxable realties, by reason of their being intended or destined for use in an industry. Held: Yes. Movable equipments, to be immobilized in contemplation of Article 415 of the Civil Code, must be the essential and principal elements of an industry or works which are carried on in a building or on a piece of land. Thus, where the business is one of transportation, which is carried on without a repair or service shop, and its rolling equipment is repaired or serviced in a shop belonging to another, the tools and equipments in its repair shop which appear movable are merely incidentals and may not be considered immovables, and, hence, not subject to assessment as real estate for purposes of the real estate tax.

Mindanao Bus Co. vs. City Assessor and Similarly, the tool and equipment in question in Treasurer this instant case are, by their nature, not essential and principal elements of petitioners business of transporting passengers and G.R. No. L-17870. September 29, 1962. cargoes by motor trucks. They are merely incidentals acquired as movables and used only for expediency to facilitate and/or improve Doctrine: Movable equipment, to be its service. Even without such tools and immobilized in contemplation of Article 415 of equipment, its business may be carried on, as the Civil Code, must be the essential and petitioner has carried on without such principal elements of an industry or works which equipments, before the war. The transportation are carried on in a building or on a piece of land. business could be carried on without the repair Thus, where the business is one of or service shop if its rolling equipment is transportation, which is carried on without a repaired or serviced in another shop belonging repair or service shop, and its rolling equipment to another. is repaired or serviced in a shop belonging to another, the tools and equipment in its repair Article 415 of the Civil Code requires that the shop which appear movable are merely industry or works be carried on in a building or incidentals and may not be considered on a piece of land. But in the case at bar the immovables , and, hence, not subject to equipments in question are destined only to

repair or service the transportation business, which is not carried on in a building or permanently on a piece of land, as demanded by the law. Said equipment may not, therefore, be deemed as real property.

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

Yes. The Supreme Court affirmed the decision of DAVAO SAW MILL vs. APRONIANO G. the lower court. CASTILLO and DAVAO LIGHT & POWER CO., INC. G.R. No. L-40411 Machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant, but not when Facts: so placed by a tenant, a usufructuary, or any Davao Saw Mill Co., Inc., is the holder of a person having only a temporary right, unless lumber concession from the Government of the such person acted as the agent of the owner. Philippine Islands. However, the land upon which the business was conducted belonged to another person. On the land the sawmill company erected a building which housed the PEOPLES BANK V DAHICAN LUMBER machinery used by it. Some of the implements thus used were clearly personal property, the conflict concerning machines which were placed SUBJECT MATTER and mounted on foundations of cement. In the : Chattel mortgage-subject matter: machinery contract of lease between the sawmill company and the owner of the land there appeared the FACTS following provision: That on the expiration of the A. period agreed upon, all the improvements and Dahican lumber company (DAMCO) obtained buildings introduced and erected by the party of several loans amounting to 250,000pesos from the second part shall pass to the exclusive Peoples bank (BANK) and ,together with DALCO, ownership of the lessor without any obligation another loan amounting to$250,000 from on its part to pay any amount for said Export-Import bank secured by five promissory improvements and buildings; which do not notes through peoples bank. Inboth loans, include the machineries and accessories in the DAMCO executed and registered respective mortgages with inclusion of after acquired improvements. properties. DAMCO and DALCO failed to satisfy In another action wherein the Davao Light & the fifth promissory note in favor ofExport bank Power Co., Inc., was the plaintiff and the Davao, so Peoples bank paid it and subsequently filed Saw, Mill Co., Inc., was the defendant, a an action for the foreclosure ofthe mortgaged judgment was rendered in favor of the plaintiff properties of DAMCO including the after in that action against the defendant; a writ of acquired machinery, equipmentand spare parts execution issued thereon, and the properties upon the latter's failure to fulfill its obligation. now in question were levied upon as personalty by the sheriff. No third party claim was filed for B. Contention of the Petitioner such properties at the time of the sales thereof Peoples bank asserted that the after acquired as is borne out by the record made by the machinery and equipment ofDAMCO are subject to the deed of mortgage executed by DAMCO. plaintiff herein. Hence, these can beincluded in the foreclosure proceedings. It must be noted also that on number of occasion, Davao Sawmill treated the machinery C. Contentions of the Respondent as personal property by executing chattel DALCO argued that the mortgages were void as mortgages in favor of third persons. One of such regards the after acquired propertiesbecause is the appellee by assignment from the original they were not registered in accordance with the chattel mortgage law. Moreover,provision of the mortgages. fourth paragraph of each of said mortgages did automatically makesubject to such The lower court rendered decision in favor of the not defendants herein. Hence, this instant appeal. mortgages the "after acquired properties", the only meaning thereof beingthat the mortgagor

was willing to constitute a lien over such to, it would be poor judgment on the part of the properties. creditor who does not see to it that a similar provision is included inthe contract. ISSUE: Makati Leasing and Financial Corporation Whether the after acquired machinery and vs. Wearever Textile Mills, Inc. equipment of DAMCO are included as subjectof G.R. No. L-58469. May 16, 1983. the Real Estate mortgage, thus can be De Castro, J. foreclosed. Doctrine: Where a chattel mortgage is RULING: constituted on a machinery permanently attached to the ground, the machinery is to be Judgment rendered in favor of Plaintiff Peoples considered as personal property. bank. The after acquired machinery Facts: Wearever Textile Mills, Inc. discounted andequipment are included in the executed and assigned several receivables with Makati mortgages.It is not disputed in the case at bar Leasing and Financial Corp. under a Receivable that the "after acquired properties" were Purchase Agreement so that the latter would purchased byDALCO in connection with, and for lend money to the former. In order to secure the use in the development of its lumber concession collection of the receivables assigned, Wearever and thatthey were purchased in addition to, or executed a Chattel Mortgage over certain raw in replacement of those already existing in the materials inventory as well as a machinery premiseson July 13, 1950. In Law, therefore, (Artos Aero Dryer Stentering Range). Upon they must be deemed to have been default of Wearever in paying what is due, immobilized, with theresult that the real estate Makati Leasing filed a petition for extrajudicial mortgages involved herein which were foreclosure of the properties mortgaged to it. registered as such did nothave to be registered The Sheriff assigned to execute such a second time as chattel mortgages in order to foreclosure, however, failed to enter the bind the "after acquiredproperties" and affect premises of Wearever to effect the seizure of the third parties.Under the fourth paragraph of both machinery. Afterwhich, petitioner filed a deeds of mortgage, it is crystal clear that all complaint for a judicial foreclosure with the RTC propertyof every nature and description taken in of Rizal which was granted even after the exchange or replacement, as well as all motion for reconsideration filed by the private buildings,machineries, fixtures, tools, respondent. Enforcing then the writ of seizure equipments, and other property that the issued by the lower court, the Sheriff removed mortgagor may acquire,construct, install, the main drive motor of the machinery. Upon attach; or use in, to upon, or in connection with appeal, CA reversed the ruling of the RTC and the premises that is, itslumber concession ordered the return of the motor to Wearever "shall immediately be and become subject to since the said machinery cannot be the subject the lien" of both mortgagesin the same manner of a replevin and chattel mortgage for it is a real and to the same extent as if already included property pursuant to Art. 415 (3) of the NCC. CA therein at the time of their execution. As the argued that the machinery is attached to the language thus used leaves no room for doubt as ground by means of bolts and the only way to to the intention of the parties, We see no useful remove it from the respondents plant would be purpose in discussing the matter extensively. to drill out or destroy the concrete floor which Suffice it to say that the stipulationreferred to is is why all that the sheriff could do to enforce the common, and We might say logical, in all cases writ was to take the main drive motor of the where the properties given ascollateral are machinery. Hence, this petition for certiorari. perishable or subject to inevitable wear and tear or were intended to be sold, or tobe used thus Issue: Whether the machinery is a personal becoming subject to the inevitable wear and property. tear but with the understanding express or implied that they shall be replaced with others Held: Yes. By destination, it is a real property to be thereafter acquired by themortgagor. Such but by virtue of the intention of the parties stipulation is neither unlawful nor immoral, its stipulated in their chattel mortgage contract, obvious purpose being tomaintain, to the extent the machinery was intended to be a personal allowed by circumstances, the original value of property. The Court made reference to its ruling the properties given assecurity. Indeed, if such in Tumalad v. Vicencio and Standard Oil Co. of properties were of the nature already referred New York v. Jaramillo where it held that a real

property may be considered as a 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, and once the parties so agreed, they are already stopped from claiming otherwise. Private respondent contended that its 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 merely required and dictated on by the petitioner to sign a chattel mortgage in blank form. The Court was not persuaded by its contention as the said issue was not duly raised in the lower and appellate courts nor will the said signing in blank by the respondent make the contract void but merely voidable by a proper action in court. Furthermore as it was undeniable that it benefited from the chattel mortgage, it cannot be allowed to impugn its efficacy for equity reasons.

amount supplied by him to Greenhaving been P25,750. Furthermore, Berkenkotter had a credit of P22,000 against said corporationfor unpaid salary. With the loan of P25,750 and said credit of P22,000, the Mabalacat Sugar Co.,Inc., purchased the additional machinery and equipment.On 10 June 1927, Green applied to Cu Unjieng e Hijos for an additional loan of P75,000 offeringas security the additional machinery and equipment acquired by said Green and installed in thesugar central after the execution of the original mortgage deed, on 27 April 1927, together withwhatever additional equipment acquired with said loan. Green failed to obtain said loan. Hence,above mentioned mortgage was in effect. Issue: Are the additional machines also considered mortgaged? Held: Article 1877 of the Civil Code provides that mortgage includes all natural accessions,improvements, growing fruits, and rents not collected when the obligation falls due, and theamount of any indemnities paid or due the owner by the insurers of the mortgaged property or byvirtue of the exercise of the power of eminent domain, with the declarations, amplifications, andlimitations established by law, whether the state continues in the possession of the person whomortgaged it or whether it passes into the hands of a third person. It is a rule, that in a mortgageof 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 there after themortgage was constituted, are also included.

Berkenkotter v. Cu Unjieng Facts: On 26 April 1926, the Mabalacat Sugar Company obtained from Cu Unjieng e Hijos, a loansecured by a first mortgage constituted on 2 parcels of land "with all its buildings, improvements,sugarcane mill, steel railway, telephone line, apparatus, utensils and whatever forms part or is anecessary complement of said sugar-cane mill, steel railway, telephone line, now existing or thatmay in the future exist in said lots.On 5 October 1926, the Mabalacat Sugar Company decided to increase the capacity of its sugar central by buying additional machinery and equipment, so that instead of milling 150 tons daily,it could produce 250. Green proposed to the Berkenkotter, to advance the necessary amount for the purchase of said machinery and equipment, promising to reimburse him as soon as he couldobtain an additional loan from the mortgagees, Cu Unjieng e Hijos, and that in case Green shouldfail to obtain an additional loan from Cu Unjieng e Hijos, said machinery and equipment would become security therefore, said Green binding himself not to mortgage nor encumber them toanybody until Berkenkotter be fully reimbursed for the corporation's indebtedness to him.Having agreed to said proposition made in a letter dated 5 October 1926, Berkenkotter, on 9October 1926, delivered the sum of P1,710 to Green, the total

Sergs Products, Inc. vs. Pci Leasing and Finance, Inc. G.R. No. 137705. August 22, 2000. Panganiban, J.: Doctrine: After agreeing to a contract stipulating that a real or immovable property be considered as personal or movable, a party is estopped from subsequently claiming otherwise. Hence, such property is a proper subject of a

writ of replevin contracting party.

other alleged to be wrongfully detained and requiring the sheriff forthwith to take such property into his custody. Facts: On February 13, 1998, respondent PCI Leasing and Finance, Inc. (PCI Leasing for short) filed with the RTC-QC a complaint for [a] On the other hand, Article 415 of the Civil Code sum of money, with an application for a writ of enumerates immovable or real property as replevin. follows: On March 6, 1998, respondent judge issued a writ of replevin directing its sheriff to seize and deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of the necessary expenses. On March 24, 1998, in implementation of said writ, the sheriff proceeded to petitioners factory, seized one machinery with [the] word that he [would] return for the other machineries. Petitioners then filed a motion for special protective order, invoking the power of the court to control the conduct of its officers and amend and control its processes, praying for a directive for the sheriff to defer enforcement of the writ of replevin. This motion was opposed by PCI Leasing, on the ground that the properties [were] still personal and therefore still subject to seizure and a writ of replevin. ART. 415. property: The following are immovable

obtained

by

the

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; In the present case, the machines that were the subjects of the Writ of Seizure were placed by petitioners in the factory built on their own land. Indisputably, they were essential and principal elements of their chocolate-making industry. Hence, although each of them was movable or personal property on its own, all of them have become immobilized by destination because they are essential and principal elements in the industry. In that sense, petitioners are correct in arguing that the said machines are real, not personal, property pursuant to Article 415 (5) of the Civil Code.

In their Reply, petitioners asserted that the properties sought to be seized [were] immovable as defined in Article 415 of the Civil Code, the parties agreement to the contrary notwithstanding. They argued that to give effect to the agreement would be prejudicial to innocent third parties. They further stated that PCI Leasing [was] estopped from treating these machineries as personal because the contracts Be that as it may, we disagree with the in which the alleged agreement [were] submission of the petitioners that the said embodied [were] totally sham and farcical. machines are not proper subjects of the Writ of Seizure. On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take possession The Court has held that contracting parties may of the remaining properties. He was able to take validly stipulate that a real property be two more, but was prevented by the workers considered as personal. After agreeing to such from taking the rest. stipulation, they are consequently estopped from claiming otherwise. Under the principle of estoppel, a party to a contract is ordinarily Issue: Whether the said machines are personal, precluded from denying the truth of any not immovable, property which may be a proper material fact found therein. subject of a writ of replevin. In the present case, the Lease Agreement Held: Rule 60 of the Rules of Court provides clearly provides that the machines in question that writs of replevin are issued for the recovery are to be considered as personal property. of personal property only. Section 3 thereof Specifically, Section 12.1 of the Agreement reads: reads as follows: SEC. 3. Order. Upon the filing of such affidavit and approval of the bond, the court shall issue an order and the corresponding writ of replevin describing the personal property 12.1 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 security. As the land at that time was not yet thereon, or attached in any manner to what is brought under the operation of the Torrens permanent. System, the mortgage on the same was registered on 16 November 1946, under Act Clearly then, petitioners are estopped from 3344. Subsequently, when the corporation denying the characterization of the subject applied for the registration of the land under Act machines as personal property. Under the 496, such mortgage was not revealed and thus circumstances, they are proper subjects of the OCT O-391 was correspondingly issued on Writ of Seizure. October 25, 1947, without any encumbrance It should be stressed, however, that our holding appearing thereon. that the machines should be deemed Persistent demand from Lopez caused Vicente personal property pursuant to the Lease Orosa, Jr. to execute, on 17 March 1947, an Agreement is good only insofar as the alleged deed of assignment of his 420 shares contracting parties are concerned. Hence, while of stock of the Plaza Theater, Inc., at P100 per the parties are bound by the Agreement, third share or with a total value of P42,000 in favor of persons acting in good faith are not affected by the creditor, and as the obligation still remained its stipulation characterizing the subject unsettled, Lopez filed on 12 November 1947, a machinery as personal. In any event, there is no complaint with the CFI Batangas against Vicente showing that any specific third party would be Orosa Jr. and Plaza Theatre, Inc., praying that adversely affected. defendants be sentenced to pay him jointly and severally the sum of P41,771.35 with legal interest from the filing of the action; that in case Lopez vs. Orosa, Jr. and Plaza Theatre, Inc. defendants fail to pay the same, that the building and the land owned by the corporation be sold at public auction and the proceeds G.R. Nos. L-10817-18. February 28, 1958. thereof be applied to said indebtedness. Plaintiff also caused the annotation of a notice of lis Doctrine: In the absence of any specific pendens on said properties with the Register of provision of law to the contrary, a building is an Deeds. immovable property, irrespective of whether or The surety company upon discovery that the not said structure and the land on which it is land was already registered under the Torrens adhered to belong to the same owner. System and that there was a notice of lis Facts: Sometime in May, 1946, Vicente Orosa, Jr., invited Lopez to make an investment in the theatre business. Although Lopez expressed his unwillingness to invest of the same, he agreed to supply the lumber necessary for the construction of the proposed theatre, and at Orosas request and assurance that the latter would be personally liable for any account that the said construction might incur, Lopez further agreed that payment therefore would be on demand and not cash on delivery basis. With this, Lopez delivered the lumber which was used for the construction of the Plaza Theatre on May 17, 1946, up to December 4 of the same year. The total cost of materials amounted to P62,255.85 but Lopez was only paid P20,848.50, thus leaving a balance of P41,771.35. Orosa and Rustia, corporation president, promised Lopez to obtain a bank loan to satisfy the balance, to which assurance Lopez had to accede. Unknown to Lopez, Orosa and Rustia already secured a loan for P30,000 from the PNB with the Luzon Surety Company as surety, and the corporation in turn executed a mortgage on the land and building in favor of said company as counterpendens thereon, filed a petition for review of the decree of the land registration court in order to annotate the lights and interests of the surety company over said properties. Lopez opposed by asserting that the amount demanded by him constituted a preferred lien over the properties of the obligors; that the surety company was guilty of negligence when it failed to present an opposition to the application for registration of the property; and that if any annotation of the rights and interest of said surety would ever be made, same must be subject to the lien in his favor. The court ruled that Orosa 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 materialmans lien over the same; the lien being merely confined to the building and did not extend to the land on which the construction was made.

Issue: Whether materialmans lien for the value of the materials used in the construction of a building attaches to the building alone and does not extend to the land on which the building is

adhered to. Held: No. 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 properties could mean only one thing that a building is by itself an immovable property ( Leung Yee v. Strong Machinery). In 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.

werec o n s i d e r e d poles within t h e m e a n i n g o f paragraph 9 of its franchise which exempts itsp o l e s f r o m taxation. The steel towers wereconsidered personalty because they wereremovable and merely attached to s q u a r e metal frames by means of bolts and could bem o v e d f r o m p l a c e t o p l a c e w h e n unscreweda n d dismantled. F u r t h e r m o r e , t h e y a r e n o t attached to an immovable in a fixed manner, and they can be separated without breaking them a t e r i a l or causing d e t e r i o r a t i o n u p o n t h e object to which they are attached.

Note: Board of Assessment vs Meralco 10 SCRA 682 Poles Facts: - was used to denote the steel towers of a n e l e c t r i c c o m p a n y e n g a g e d i n The Philippine Commission enacted Act No. theg e n e r a t i o n o f h y d ro - e l e c t r i c 484which authorized the Municipal Board of p o w e r generated from its plant. Manilato grant a franchise to construct, maintain andoperate an electric street railway and electricl i g h t , heat and power system in the City o f Manila. Caltex vs Central Board of Assessment Meralco's electric power is generated Appeals & City Assessor of Pasay by i t s hydro-electric plant located at Botocan Falls,Laguna and is transmitted to the GR No. L-50466 City of Manila b y m e a n s o f e l e c t r i c t r a n s m i s s i o n w i r e s , running from the province of Laguna to the saidCity. These This case is about the realty tax on machinery electric transmission wires which c a r r y and equipment installed by Caltex (Philippines) h i g h v o l t a g e c u r r e n t , a r e f a s t e n e d Inc., in its gas stations located on leased land. t o insulators attached on steel towers FACTS constructedb y respondent at Caltex loaned machines and equipment to gas i n t e r v a l s , f r o m i t s h y d r o - electric station operators under an appropriate lease plant in the province of Laguna to the C i t y agreement or receipt. The lease contract of Manila. The re spo nde n t Me ralco stipulated that upon demand, the operators hasconstructed 40 of these steel shall return to Caltex the machines and t o w e r s w i t h i n Quezon City, on land belonging equipment in good condition as when received, to it. The City Assessor of Quezon City ordinary wear and tear excepted. declared thea f o r e s a i d s t e e l t o w e r s f o r r e a l p r o p e r t y t a x under Tax. Respondent The lessor of the land, where the gas station is paid the amount under protest, andf i l e d a located, does not become the owner of the p e t i t i o n f o r r e v i e w i n t h e C o u r t o f machines and equipment installed therein. Ta x Appeals. Caltex retains the ownership thereof during the term of the lease. Issue: The City Assessor of Pasay City characterized W h e t h e r o r n o t t h e M e r a l c o p o l e s the said items of gas station equipment and c o n s t i t u t e real properties so as they can be machinery as taxable realty. However, the City Board of Tax Appeals ruled that they are subjected to areal property tax. personalty. The Assessor appealed to the Central Board of Assessment Appeals. Held: The SC ruled that Meralco's steel towers The Board held on June 3, 1977 that the said

machines are real property within the meaning of Ses. 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.

bolts and could be moved from place to place when unscrewed and dismantled.

Nor are Caltex's gas station equipment and machinery the same as the tools and equipment in the repair shop of a bus company which were held to be personal property not subject to ISSUE realty tax (Mindanao Bus Co. vs. City Assessor, WON the pieces of gas station equipment and 116 Phil. 501). machinery permanently affixed by Caltex to its The Central Board of Assessment Appeals did gas station and pavement should be subject to not commit a grave abuse of discretion in realty tax. upholding the City Assessor's imposition of the realty tax on Caltex's gas station and equipment. HELD Sec.2 of the Assessment Law provides that SIBAL v. VALDEZ the realty tax is due on real property, G.R. No. L-26278 August 4, 1927 including land, buildings, machinery, and other improvements not specifically exempted in Sec.3 thereof. Doctrine: Sec.3 of the Real Property Tax Code provides A crop raised on leased premises belongs to the following definitions: the lessee and in no sense forms part of the immovable. k) Improvements a valuable addition made to property or an amelioration in its Ungathered products have the nature of conditionmore than mere repairs or personal property. In other words, the phrase replacement of wasteintended to personal property should be understood to include ungathered products. Crops, whether enhance its value, beauty, or utility m) Machinery machines, mechanical growing or standing in the field ready to be contrivances, instruments, appliances, harvested, are, when produced by annual and apparatus attached to the real cultivation, no part of the realty. estateincludes the physical facilities A valid sale may be made of a thing, which available for productioninstallation and though not yet actually in existence, is appurtenant service facilities. reasonably certain to come into existence. A The subject machines and equipment are taxable improvement and machinery within the meaning of the Assessment Law and the Real Property Tax Code, because the same are necessary to the operation of the gas station and have been attached/affixed/embedded permanently to the gas station site. Improvements on land are commonly taxed as realty even though they might be considered personalty. It is a familiar phenomenon to see things classified as real property for purposes of taxation which on general principle might be considered personal property (Standard Oil Co., vs Jaramillo, 44 PHIL 630). man may sell property of which he is potentially and not actually possessed. Facts: Plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of execution issued by the Court of First Instance of Pampanga, attached and sold to the defendant Emiliano J. Valdez the sugar cane planted by the plaintiff and his tenants on seven parcels of land. 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. However, Valdez refused to accept the money and to return the sugar cane to the plaintiff.

This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co., (119 Phil. 328) where Meralco's steel towers were exempted from taxation. The steel towers were considered personalty because they were Meanwhile, defendant argued that the sugar attached to square metal frames by means of cane was personal property hence not subject to

redemption.

Issue: 1. Whether or not the sugar cane is to be classified as personal property Issue: 2. Whether or not future crops to be harvested can be considered a valid object of sale Whether or not the court erred in declaring thatthe electrical energy may be stolen. Held: 1. No. A crop raised on leased premises in no sense forms part of the immovable. It belongs to Held: the lessee, and may be sold by him, whether it be gathered or not, and it may be sold by his I t i s t r u e t h a t e l e c t r i c i t y i s n o longer, a s formerly, regarded by judgment creditors. electricians as a fluid, butits manifestation and Ungathered products have the nature of effects, like those of gas,may be seen and felt. personal property. In other words, the phrase The true test of what is ap r o p e r s u b j e c t personal property should be understood to o f l a r c e n y s e e m s t o b e n o t whether include ungathered products. Crops, whether the subject is corporeal, but whether itis capable growing or standing in the field ready to be of appropriation by another than theowner. T h e harvested, are, when produced by annual court ruled that electricity, the same cultivation, no part of the realty. asg a s , i s a v a l u a b l e a r t i c l e o f 2. Yes. A valid sale may be made of a thing, m e r c h a n d i s e , bought and sold like other propertyand is capable of which though not yet actually in existence, is personal reasonably certain to come into existence as the appropriation by another. It isalso susceptible natural increment or usual incident of something of being severed from a mass o r l a r g e r and of being already in existence, and then belonging to the q u a n t i t y , vendor, and then title will vest in the buyer the t r a n s p o r t e d from place to place. So no error moment the thing comes into existence was committedby the trial court in holding (Emerson vs. European Railway Co., 67 Me., that electricity is asubject of larceny. 387; Cutting vs. Packers Exchange, 21 Am. St. Rep., 63.). US vs Carlos21 Phil 553 Facts: Ignacio Carlos has been a consumer o f electricity furnished by the Manila ElectricRailroad and Light C o m p a n y f o r a b u i l d i n g containing the residence of the accused and 3 o t h e r residences. Representatives of t h e company believing that more light is consumedt h a n w h a t i s s h o w n i n t h e meter installed anadditional meter on t h e p o l e o u t s i d e C a r l o s house to compare the actual consumption and found out that the latter used a jumper. Further, a jumper was found in a drawer of a small cabinet in the room of the defendants housewere the meter was installed. In the absence of any explanation for Carlos possession of said device, the presumption raised was that Carlos w a s t h e owner of the device whose only use was to deflect the current from the meter. Thus

h w a s c h a r g e d w i t h t h e c r i m e o f t h e f t amounting to 2,273KW of electric power worth 909.20 pesos.

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