1.

41 SCRA 143
GAVINO A. TUMALAD and GENEROSA R. TUMALAD vs. ALBERTA VICENCIO and EMILIANO SIMEON (G.R. No.
L-30173 September 30, 1971)
Case certified to this Court by the Court of Appeals (CA-G.R. No. 27824-R) for the reason that only questions of law are
involved.
This case was originally commenced by defendants-appellants in the municipal court of Manila in Civil Case No. 43073,
for ejectment. Having lost therein, defendants-appellants appealed to the court a quo (Civil Case No. 30993) which also
rendered a decision against them, the dispositive portion of which follows:
WHEREFORE, the court hereby renders judgment in favor of the plaintiffs and against the defendants,
ordering the latter to pay jointly and severally the former a monthly rent of P200.00 on the house, subjectmatter of this action, from March 27, 1956, to January 14, 1967, with interest at the legal rate from April
18, 1956, the filing of the complaint, until fully paid, plus attorney's fees in the sum of P300.00 and to pay
the costs.
It appears on the records that on 1 September 1955 defendants-appellants executed a chattel mortgage in favor of
plaintiffs-appellees over their house of strong materials located at No. 550 Int. 3, Quezon Boulevard, Quiapo, Manila, over
Lot Nos. 6-B and 7-B, Block No. 2554, which were being rented from Madrigal & Company, Inc. The mortgage was
registered in the Registry of Deeds of Manila on 2 September 1955. The herein mortgage was executed to guarantee a
loan of P4,800.00 received from plaintiffs-appellees, payable within one year at 12% per annum. The mode of payment
was P150.00 monthly, starting September, 1955, up 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 becomeimmediately due and Payable and
the Chattel Mortgage will be enforceable in accordance with the provisions of Special Act No. 3135, and
for this purpose, the Sheriff of the City of Manila or any of his deputies is hereby empowered and
authorized to sell all the Mortgagor's property after the necessary publication in order to settle the
financial debts of P4,800.00, plus 12% yearly interest, and attorney's fees... 2
When defendants-appellants defaulted in paying, the mortgage was extrajudicially foreclosed, and on 27 March 1956, the
house was sold at public auction pursuant to the said contract. As highest bidder, plaintiffs-appellees were issued the
corresponding certificate of sale. 3 Thereafter, on 18 April 1956, plaintiffs-appellant commenced Civil Case No. 43073 in
the municipal court of Manila, praying, among other things, that the house be vacated and its possession surrendered to
them, and for defendants-appellants to pay rent of P200.00 monthly from 27 March 1956 up to the time the possession is
surrendered. 4 On 21 September 1956, the municipal court rendered its decision
... ordering the defendants to vacate the premises described in the complaint; ordering further to pay
monthly the amount of P200.00 from March 27, 1956, until such (time that) the premises is (sic)
completely vacated; plus attorney's fees of P100.00 and the costs of the suit. 5
Defendants-appellants, in their answers in both the municipal court and court a quo impugned the legality of the chattel
mortgage, claiming that they are still the owners of the house; but they waived the right to introduce evidence, oral or
documentary. Instead, they relied on their memoranda in support of their motion to dismiss, predicated mainly on the
grounds that: (a) the municipal court did not have jurisdiction to try and decide the case because (1) the issue involved, is
ownership, and (2) there was no allegation of prior possession; and (b) failure to prove prior demand pursuant to Section
2, Rule 72, of the Rules of Court. 6
During the pendency of the appeal to the Court of First Instance, defendants-appellants failed to deposit the rent for
November, 1956 within the first 10 days of December, 1956 as ordered in the decision of the municipal court. As a result,
the court granted plaintiffs-appellees' motion for execution, and it was actually issued on 24 January 1957. However, the
judgment regarding the surrender of possession to plaintiffs-appellees could not be executed because the subject house
had been already demolished on 14 January 1957 pursuant to the order of the court in a separate civil case (No. 25816)
for ejectment against the present defendants for non-payment of rentals on the land on which the house was constructed.
The motion of plaintiffs for dismissal of the appeal, execution of the supersedeas bond and withdrawal of deposited
rentals was denied for the reason that the liability therefor was disclaimed and was still being litigated, and under Section
8, Rule 72, rentals deposited had to be held until final disposition of the appeal. 7

On 7 October 1957, the appellate court of First Instance rendered its decision, the dispositive portion of which is quoted
earlier. The said decision was appealed by defendants to the Court of Appeals which, in turn, certified the appeal to this
Court. Plaintiffs-appellees failed to file a brief and this appeal was submitted for decision without it.
Defendants-appellants submitted numerous assignments of error which can be condensed into two questions, namely: .
(a) Whether the municipal court from which the case originated had jurisdiction to adjudicate the same;
(b) Whether the defendants are, under the law, legally bound to pay rentals to the plaintiffs during the
period of one (1) year provided by law for the redemption of the extrajudicially foreclosed house.
We will consider these questions seriatim.
(a) Defendants-appellants mortgagors question the jurisdiction of the municipal court from which the case originated, and
consequently, the appellate jurisdiction of the Court of First Instance a quo, on the theory that the chattel mortgage is
void ab initio; whence it would follow that the extrajudicial foreclosure, and necessarily the consequent auction sale, are
also void. Thus, the ownership of the house still remained with defendants-appellants who are entitled to possession and
not plaintiffs-appellees. Therefore, it is argued by defendants-appellants, the issue of ownership will have to be
adjudicated first in order to determine possession. lt is contended further that ownership being in issue, it is the Court of
First Instance which has jurisdiction and not the municipal court.
Defendants-appellants predicate their theory of nullity of the chattel mortgage on two grounds, which are: (a) that, their
signatures on the chattel mortgage were obtained through fraud, deceit, or trickery; and (b) that the subject matter of the
mortgage is a house of strong materials, and, being an immovable, it can only be the subject of a real estate mortgage
and not a chattel mortgage.
On the charge of fraud, deceit or trickery, the Court of First Instance found defendants-appellants' contentions as not
supported by evidence and accordingly dismissed the charge, 8 confirming the earlier finding of the municipal court that
"the defense of ownership as well as the allegations of fraud and deceit ... are mere allegations." 9
It has been held in Supia and Batiaco vs. Quintero and Ayala 10 that "the answer is a mere statement of the facts which
the party filing it expects to prove, but it is not evidence; 11 and further, that when the question to be determined is one of
title, the Court is given the authority to proceed with the hearing of the cause until this fact is clearly established. In the
case of Sy vs. Dalman, 12 wherein the defendant was also a successful bidder in an auction sale, it was likewise held by
this Court that in detainer cases the aim of ownership "is a matter of defense and raises an issue of fact which should be
determined from the evidence at the trial." What determines jurisdiction are the allegations or averments in the complaint
and the relief asked for. 13
Moreover, even granting that the charge is true, fraud or deceit does not render a contract void ab initio, and can only be a
ground for rendering the contract voidable or annullable pursuant to Article 1390 of the New Civil Code, by a proper action
in court. 14 There is nothing on record to show that the mortgage has been annulled. Neither is it disclosed that steps were
taken to nullify the same. Hence, defendants-appellants' claim of ownership on the basis of a voidable contract which has
not been voided fails.
It is claimed in the alternative by defendants-appellants that even if there was no fraud, deceit or trickery, the chattel
mortgage was still null and void ab initio because only personal properties can be subject of a chattel mortgage. The rule
about the status of buildings as immovable property is stated in Lopez vs. Orosa, Jr. and Plaza Theatre Inc., 15 cited
in Associated Insurance Surety Co., Inc. vs. Iya, et al. 16 to the effect that
... it is obvious that the inclusion of the building, separate and distinct from the land, in the enumeration of
what may constitute real properties (art. 415, New Civil Code) could only mean one thing that a
building is by itself an immovable property irrespective of whether or not said structure and the land on
which it is adhered to belong to the same owner.
Certain deviations, however, have been allowed for various reasons. In the case of Manarang and Manarang vs.
Ofilada, 17 this Court stated that "it is undeniable that the parties to a contract may by agreement treat as personal
property that which by nature would be real property", citing Standard Oil Company of New York vs. Jaramillo. 18 In the
latter case, the mortgagor conveyed and transferred to the mortgagee by way of mortgage "the following
described personal property."19 The "personal property" consisted of leasehold rights and a building. Again, in the case
of Luna vs. Encarnacion, 20 the subject of the contract designated as Chattel Mortgage was a house of mixed materials,

and this Court hold therein that it was a valid Chattel mortgage because it was so expressly designated and specifically
that the property given as security "is a house of mixed materials, which by its very nature is considered personal
property." In the later case of Navarro vs. Pineda, 21 this Court stated that
The view that parties to a deed of chattel mortgage may agree to consider a house as personal property
for the purposes of said contract, "is good only insofar as the contracting parties are concerned. It is
based, partly, upon the principle of estoppel" (Evangelista vs. Alto Surety, No. L-11139, 23 April 1958). In
a case, a mortgaged house built on a rented land was held to be a personal property, not only because
the deed of mortgage considered it as such, but also because it did not form part of the land (Evangelists
vs. Abad, [CA]; 36 O.G. 2913), for it is now settled that an object placed on land by one who had only a
temporary right to the same, such as the lessee or usufructuary, does not become immobilized by
attachment (Valdez vs. Central Altagracia, 222 U.S. 58, cited in Davao Sawmill Co., Inc. vs. Castillo, et
al., 61 Phil. 709). Hence, if a house belonging to a person stands on a rented land belonging to another
person, it may be mortgaged as a personal property as so stipulated in the document of mortgage.
(Evangelista vs. Abad, Supra.) It should be noted, however that the principle is predicated on statements
by the owner declaring his house to be a chattel, a conduct that may conceivably estop him from
subsequently claiming otherwise. (Ladera vs. C.N. Hodges, [CA] 48 O.G. 5374): 22
In the contract now before Us, the house on rented land is not only expressly designated as Chattel Mortgage; it
specifically provides that "the mortgagor ... voluntarily CEDES, SELLS and TRANSFERS by way of Chattel
Mortgage 23 the property together with its leasehold rights over the lot on which it is constructed and participation
..." 24Although there is no specific statement referring to the subject house as personal property, yet by ceding, selling or
transferring a property by way of chattel mortgage defendants-appellants could only have meant to convey the house as
chattel, or at least, intended to treat the same as such, so that they should not now be allowed to make an inconsistent
stand by claiming otherwise. Moreover, the subject house stood on a rented lot to which defendats-appellants merely had
a temporary right as lessee, and although this can not in itself alone determine the status of the property, it does so when
combined with other factors to sustain the interpretation that the parties, particularly the mortgagors, intended to treat the
house as personalty. Finally unlike in the Iya cases, Lopez vs. Orosa, Jr. and Plaza Theatre, Inc. 25 and Leung Yee vs. F.
L. Strong Machinery and Williamson, 26 wherein third persons assailed the validity of the chattel mortgage, 27 it is the
defendants-appellants themselves, as debtors-mortgagors, who are attacking the validity of the chattel mortgage in this
case. The doctrine of estoppel therefore applies to the herein defendants-appellants, having treated the subject house as
personalty.
(b) Turning to the question of possession and rentals of the premises in question. The Court of First Instance noted in its
decision that nearly a year after the foreclosure sale the mortgaged house had been demolished on 14 and 15 January
1957 by virtue of a decision obtained by the lessor of the land on which the house stood. For this reason, the said court
limited itself to sentencing the erstwhile mortgagors to pay plaintiffs a monthly rent of P200.00 from 27 March 1956 (when
the chattel mortgage was foreclosed and the house sold) until 14 January 1957 (when it was torn down by the Sheriff),
plus P300.00 attorney's fees.
Appellants mortgagors question this award, claiming that they were entitled to remain in possession without any obligation
to pay rent during the one year redemption period after the foreclosure sale, i.e., until 27 March 1957. On this issue, We
must rule for the appellants.
Chattel mortgages are covered and regulated by the Chattel Mortgage Law, Act No. 1508. 28 Section 14 of this Act allows
the mortgagee to have the property mortgaged sold at public auction through a public officer in almost the same manner
as that allowed by Act No. 3135, as amended by Act No. 4118, provided that the requirements of the law relative to notice
and registration are complied with. 29 In the instant case, the parties specifically stipulated that "the chattel mortgage will
be enforceable in accordance with the provisions of Special Act No. 3135 ... ." 30 (Emphasis supplied).
Section 6 of the Act referred to 31 provides that the debtor-mortgagor (defendants-appellants herein) may, at any time
within one year from and after the date of the auction sale, redeem the property sold at the extra judicial foreclosure sale.
Section 7 of the same Act 32 allows the purchaser of the property to obtain from the court the possession during the period
of redemption: but the same provision expressly requires the filing of a petition with the proper Court of First Instance and
the furnishing of a bond. It is only upon filing of the proper motion and the approval of the corresponding bond that the
order for a writ of possession issues as a matter of course. No discretion is left to the court. 33 In the absence of such a
compliance, as in the instant case, the purchaser can not claim possession during the period of redemption as a matter of
right. In such a case, the governing provision is Section 34, Rule 39, of the Revised Rules of Court 34 which also applies to
properties purchased in extrajudicial foreclosure proceedings. 35 Construing the said section, this Court stated in the
aforestated case of Reyes vs. Hamada.

In other words, before the expiration of the 1-year period within which the judgment-debtor or mortgagor
may redeem the property, the purchaser thereof is not entitled, as a matter of right, to possession of the
same. Thus, while it is true that the Rules of Court allow the purchaser to receive the rentals if the
purchased property is occupied by tenants, he is, nevertheless, accountable to the judgment-debtor
or mortgagor as the case may be, for the amount so received and the same will be duly credited against
the redemption price when the said debtor or mortgagor effects the redemption.Differently stated, the
rentals receivable from tenants, although they may be collected by the purchaser during the redemption
period, do not belong to the latter but still pertain to the debtor of mortgagor. The rationale for the Rule, it
seems, is to secure for the benefit of the debtor or mortgagor, the payment of the redemption amount and
the consequent return to him of his properties sold at public auction. (Emphasis supplied)
The Hamada case reiterates the previous ruling in Chan vs. Espe. 36
Since the defendants-appellants were occupying the house at the time of the auction sale, they are entitled to remain in
possession during the period of redemption or within one year from and after 27 March 1956, the date of the auction sale,
and to collect the rents or profits during the said period.
It will be noted further that in the case at bar the period of redemption had not yet expired when action was instituted in
the court of origin, and that plaintiffs-appellees did not choose to take possession under Section 7, Act No. 3135, as
amended, which is the law selected by the parties to govern the extrajudicial foreclosure of the chattel mortgage. Neither
was there an allegation to that effect. Since plaintiffs-appellees' right to possess was not yet born at the filing of the
complaint, there could be no violation or breach thereof. Wherefore, the original complaint stated no cause of action and
was prematurely filed. For this reason, the same should be ordered dismissed, even if there was no assignment of error to
that effect. The Supreme Court is clothed with ample authority to review palpable errors not assigned as such if it finds
that their consideration is necessary in arriving at a just decision of the cases. 37
It follows that the court below erred in requiring the mortgagors to pay rents for the year following the foreclosure sale, as
well as attorney's fees.
FOR THE FOREGOING REASONS, the decision appealed from is reversed and another one entered, dismissing the
complaint. With costs against plaintiffs-appellees.

2. 37 PHIL 644
LEUNG YEE vs. FRANK L. STRONG MACHINERY COMPANY and J. G. WILLIAMSON (G.R. No. L-11658, February
15, 1918)
The "Compaia 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 the purchase price. It included in the
mortgage deed the building of strong materials in which the machinery was installed, without any reference to the land on
which it stood. The indebtedness secured by this instrument not having been paid when it fell due, the mortgaged property
was sold by the sheriff, in pursuance of the terms of the mortgage instrument, and was bought in by the machinery
company. The mortgage was registered in the chattel mortgage registry, and the sale of the property to the machinery
company in satisfaction of the mortgage was annotated in the same registry on December 29, 1913.
A few weeks thereafter, on or about the 14th of January, 1914, the "Compaia Agricola Filipina" executed a deed of sale
of the land upon which the building stood to the machinery company, but this deed of sale, although executed in a public
document, was not registered. This deed makes no reference to the building erected on the land and would appear to
have been executed for the purpose of curing any defects which might be found to exist in the machinery company's title
to the building under the sheriff's certificate of sale. The machinery company went into possession of the building at or
about the time when this sale took place, that is to say, the month of December, 1913, and it has continued in possession
ever since.
At or about the time when the chattel mortgage was executed in favor of the machinery company, the mortgagor, the
"Compaia Agricola Filipina" executed another mortgage to the plaintiff upon the building, separate and apart from the
land on which it stood, to secure payment of the balance of its indebtedness to the plaintiff under a contract for the
construction of the building. Upon the failure of the mortgagor to pay the amount of the indebtedness secured by the
mortgage, the plaintiff secured judgment for that amount, levied execution upon the building, bought it in at the sheriff's
sale on or about the 18th of December, 1914, and had the sheriff's certificate of the sale duly registered in the land
registry of the Province of Cavite.
At the time when the execution was levied upon the building, the defendant machinery company, which was in
possession, filed with the sheriff a sworn statement setting up its claim of title and demanding the release of the property
from the levy. Thereafter, upon demand of the sheriff, the plaintiff executed an indemnity bond in favor of the sheriff in the
sum of P12,000, in reliance upon which the sheriff sold the property at public auction to the plaintiff, who was the highest
bidder at the sheriff's sale.
This action was instituted by the plaintiff to recover possession of the building from the machinery company.
The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment in favor of the machinery company,
on the ground that the company had its title to the building registered prior to the date of registry of the plaintiff's
certificate.
Article 1473 of the Civil Code is as follows:
If the same thing should have been sold to different vendees, the ownership shall be transfer to the person who
may have the first taken possession thereof in good faith, if it should be personal property.
Should it be real property, it shall belong to the person acquiring it who first recorded it in the registry.
Should there be no entry, the property shall belong to the person who first took possession of it in good faith, and,
in the absence thereof, to the person who presents the oldest title, provided there is good faith.
The registry her referred to is of course the registry of real property, and it must be apparent that 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. By its express terms, the Chattel Mortgage Law contemplates and makes provision for
mortgages of personal property; and the sole purpose and object of the chattel mortgage registry is to provide for the
registry of "Chattel mortgages," that is to say, mortgages of personal property executed in the manner and form
prescribed in the statute. The building of strong materials in which the rice-cleaning machinery was installed by the
"Compaia Agricola Filipina" was real property, and the mere fact that the parties seem to have dealt with it separate and
apart from the land on which it stood in no wise changed its character as real property. It follows that neither the original

registry in the chattel mortgage of the building and the machinery installed therein, not the annotation in that registry of the
sale of the mortgaged property, had any effect whatever so far as the building was concerned.
We conclude that the ruling in favor of the machinery company cannot be sustained on the ground assigned by the trial
judge. We are of opinion, however, that the judgment must be sustained on the ground that the agreed statement of facts
in the court below discloses that neither the purchase of the building by the plaintiff nor his inscription of the sheriff's
certificate of sale in his favor was made in good faith, and that the machinery company must be held to be the owner of
the property under the third paragraph of the above cited article of the code, it appearing that the company first took
possession of the property; and further, that the building and the land were sold to the machinery company long prior to
the date of the sheriff's sale to the plaintiff.
It has been suggested that since the provisions of article 1473 of the Civil Code require "good faith," in express terms, in
relation to "possession" and "title," but contain no express requirement as to "good faith" in relation to the "inscription" of
the property on the registry, it must be presumed that good faith is not an essential requisite of registration in order that it
may have the effect contemplated in this article. We cannot agree with this contention. It could not have been the intention
of the legislator to base the preferential right secured under this article of the code upon an inscription of title in bad faith.
Such an interpretation placed upon the language of this section would open wide the door to fraud and collusion. The
public records cannot be converted into instruments of fraud and oppression by one who secures an inscription therein in
bad faith. The force and effect given by law to an inscription in a public record presupposes the good faith of him who
enters such inscription; and rights created by statute, which are predicated upon an inscription in a public registry, do not
and cannot accrue under an inscription "in bad faith," to the benefit of the person who thus makes the inscription.
Construing the second paragraph of this article of the code, the supreme court of Spain held in its sentencia of the 13th of
May, 1908, that:
This rule is always to be understood on the basis of the good faith mentioned in the first paragraph; therefore, it
having been found that the second purchasers who record their purchase had knowledge of the previous sale, the
question is to be decided in accordance with the following paragraph. (Note 2, art. 1473, Civ. Code, Medina and
Maranon [1911] edition.)
Although article 1473, in its second paragraph, provides that the title of conveyance of ownership of the real
property that is first recorded in the registry shall have preference, this provision must always be understood on
the basis of the good faith mentioned in the first paragraph; the legislator could not have wished to strike it out
and to sanction bad faith, just to comply with a mere formality which, in given cases, does not obtain even in real
disputes between third persons. (Note 2, art. 1473, Civ. Code, issued by the publishers of the La Revista de los
Tribunales, 13th edition.)
The agreed statement of facts clearly discloses that the plaintiff, when he bought the building at the sheriff's sale and
inscribed his title in the land registry, was duly notified that the machinery company had bought the building from plaintiff's
judgment debtor; that it had gone into possession long prior to the sheriff's sale; and that it was in possession at the time
when the sheriff executed his levy. The execution of an indemnity bond by the plaintiff in favor of the sheriff, after the
machinery company had filed its sworn claim of ownership, leaves no room for doubt in this regard. Having bought in the
building at the sheriff's sale with full knowledge that at the time of the levy and sale the building had already been sold to
the machinery company by the judgment debtor, the plaintiff cannot be said to have been a purchaser in good faith; and of
course, the subsequent inscription of the sheriff's certificate of title must be held to have been tainted with the same
defect.
Perhaps we should make it clear that in holding that the inscription of the sheriff's certificate of sale to the plaintiff was not
made in good faith, we should not be understood as questioning, in any way, the good faith and genuineness of the
plaintiff's claim against the "Compaia Agricola Filipina." The truth is that both the plaintiff and the defendant company
appear to have had just and righteous claims against their common debtor. No criticism can properly be made of the
exercise of the utmost diligence by the plaintiff in asserting and exercising his right to recover the amount of his claim from
the estate of the common debtor. We are strongly inclined to believe that in procuring the levy of execution upon the
factory building and in buying it at the sheriff's sale, he considered that he was doing no more than he had a right to do
under all the circumstances, and it is highly possible and even probable that he thought at that time that he would be able
to maintain his position in a contest with the machinery company. There was no collusion on his part with the common
debtor, and no thought of the perpetration of a fraud upon the rights of another, in the ordinary sense of the word. He may
have hoped, and doubtless he did hope, that the title of the machinery company would not stand the test of an action in a
court of law; and if later developments had confirmed his unfounded hopes, no one could question the legality of the
propriety of the course he adopted.

But it appearing that he had full knowledge of the machinery company's claim of ownership when he executed the
indemnity bond and bought in the property at the sheriff's sale, and it appearing further that the machinery company's
claim of ownership was well founded, 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 this sense that we find that he was not a purchaser in good faith.
One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired
title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied
to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary
to acquaint him with the defects in the title of his vendor. A purchaser cannot close his eyes to facts which should put a
reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the
title of the vendor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of
the existence of a defect in his vendor's title, will not make him an innocent purchaser for value, if afterwards develops
that the title was in fact defective, and it appears that he had such notice of the defects as would have led to its discovery
had he acted with that measure of precaution which may reasonably be acquired of a prudent man in a like situation.
Good faith, or lack of it, is in its analysis a question of intention; but in ascertaining the intention by which one is actuated
on a given occasion, we are necessarily controlled by the evidence as to the conduct and outward acts by which alone the
inward motive may, with safety, be determined. So it is that "the honesty of intention," "the honest lawful intent," which
constitutes good faith implies a "freedom from knowledge and circumstances which ought to put a person on inquiry," and
so it is that proof of such knowledge overcomes the presumption of good faith in which the courts always indulge in the
absence of proof to the contrary. "Good faith, or the want of it, is not a visible, tangible fact that can be seen or touched,
but rather a state or condition of mind which can only be judged of by actual or fancied tokens or signs."
(Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros.
Co. vs. Bromley, 119 Mich., 8, 10, 17.)
We conclude that upon the grounds herein set forth the disposing part of the decision and judgment entered in the court
below should be affirmed with costs of this instance against the appellant. So ordered.

3. 44 PHIL 631
THE STANDARD OIL COMPANY OF NEW YORK vs. JOAQUIN JARAMILLO, as register of deeds of the City of
Manila (G.R. No. L-20329, March 16, 1923)
This cause is before us upon demurrer interposed by the respondent, Joaquin Jaramillo, register of deeds of the City of
Manila, to an original petition of the Standard Oil Company of New York, seeking a peremptory mandamusto compel the
respondent to record in the proper register a document purporting to be a chattel mortgage executed in the City of Manila
by Gervasia de la Rosa, Vda. de Vera, in favor of the Standard Oil Company of New York.
It appears from the petition that on November 27, 1922, Gervasia de la Rosa, Vda. de Vera, was the lessee of a parcel of
land situated in the City of Manila and owner of the house of strong materials built thereon, upon which date she executed
a document in the form of a chattel mortgage, purporting to convey to the petitioner by way of mortgage both the
leasehold interest in said lot and the building which stands thereon.
The clauses in said document describing the property intended to be thus mortgage are expressed in the following words:
Now, therefore, the mortgagor hereby conveys and transfer to the mortgage, by way of mortgage, the following
described personal property, situated in the City of Manila, and now in possession of the mortgagor, to wit:
(1) All of the right, title, and interest of the mortgagor in and to the contract of lease hereinabove referred to, and
in and to the premises the subject of the said lease;
(2) The building, property of the mortgagor, situated on the aforesaid leased premises.
After said document had been duly acknowledge and delivered, the petitioner caused the same to be presented to the
respondent, Joaquin Jaramillo, as register of deeds of the City of Manila, for the purpose of having the same recorded in
the book of record of chattel mortgages. Upon examination of the instrument, the respondent was of the opinion that it
was not a chattel mortgage, for the reason that the interest therein mortgaged did not appear to be personal property,
within the meaning of the Chattel Mortgage Law, and registration was refused on this ground only.
We are of the opinion that the position taken by the respondent is untenable; and it is his duty to accept the proper fee
and place the instrument on record. The duties of a register of deeds in respect to the registration of chattel mortgage are
of a purely ministerial character; and no provision of law can be cited which confers upon him any judicial or quasi-judicial
power to determine the nature of any document of which registration is sought as a chattel mortgage.
The original provisions touching this matter are contained in section 15 of the Chattel Mortgage Law (Act No. 1508), as
amended by Act No. 2496; but these have been transferred to section 198 of the Administrative Code, where they are
now found. There is nothing in any of these provisions conferring upon the register of deeds any authority whatever in
respect to the "qualification," as the term is used in Spanish law, of chattel mortgage. His duties in respect to such
instruments are ministerial only. The efficacy of the act of recording a chattel mortgage consists in the fact that it operates
as constructive notice of the existence of the contract, and the legal effects of the contract must be discovered in the
instrument itself in relation with the fact of notice. Registration adds nothing to the instrument, considered as a source of
title, and affects nobody's rights except as a specifies of notice.
Articles 334 and 335 of the Civil Code supply no absolute criterion for discriminating between real property and personal
property for purpose of the application of the Chattel Mortgage Law. Those articles state rules which, considered as a
general doctrine, are law in this jurisdiction; but it must not be forgotten that under given conditions property may have
character different from that imputed to it in said articles. It is undeniable that the parties to a contract may by agreement
treat as personal property that which by nature would be real property; and 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. Other
situations are constantly arising, and from time to time are presented to this court, in which the proper classification of one
thing or another as real or personal property may be said to be doubtful.
The point submitted to us in this case was determined on September 8, 1914, in an administrative ruling promulgated by
the Honorable James A. Ostrand, now a Justice of this Court, but acting at that time in the capacity of Judge of the fourth
branch of the Court of First Instance of the Ninth Judicial District, in the City of Manila; and little of value can be here
added to the observations contained in said ruling. We accordingly quote therefrom as follows:

It is unnecessary here to determine whether or not the property described in the document in question is real or
personal; the discussion may be confined to the point as to whether a register of deeds has authority to deny the
registration of a document purporting to be a chattel mortgage and executed in the manner and form prescribed
by the Chattel Mortgage Law.
Then, after quoting section 5 of the Chattel Mortgage Law (Act No. 1508), his Honor continued:
Based principally upon the provisions of section quoted the Attorney-General of the Philippine Islands, in an
opinion dated August 11, 1909, held that a register of deeds has no authority to pass upon the capacity of the
parties to a chattel mortgage which is presented to him for record. A fortiori a register of deeds can have no
authority to pass upon the character of the property sought to be encumbered by a chattel mortgage. Of course, if
the mortgaged property is real instead of personal the chattel mortgage would no doubt be held ineffective as
against third parties, but this is a question to be determined by the courts of justice and not by the register of
deeds.
In Leung Yee vs. Frank L. Strong Machinery Co. and Williamson (37 Phil., 644), this court held that where the interest
conveyed is of the nature of real, property, the placing of the document on record in the chattel mortgage register is a
futile act; but that decision is not decisive of the question now before us, which has reference to the function of the register
of deeds in placing the document on record.
In the light of what has been said it becomes unnecessary for us to pass upon the point whether the interests conveyed in
the instrument now in question are real or personal; and we declare it to be the duty of the register of deeds to accept the
estimate placed upon the document by the petitioner and to register it, upon payment of the proper fee.
The demurrer is overruled; and unless within the period of five days from the date of the notification hereof, the
respondent shall interpose a sufficient answer to the petition, the writ of mandamus will be issued, as prayed, but without
costs. So ordered.

4. 218 SCRA 271

BENGUET CORPORATION vs. CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT
APPEALS OF ZAMBALES, PROVINCIAL ASSESSOR OF ZAMBALES, PROVINCE OF ZAMBALES, and
MUNICIPALITY OF SAN MARCELINO (G.R. No. 106041 January 29, 1993)
The realty tax assessment involved in this case amounts to P11,319,304.00. It has been imposed on the petitioner's
tailings dam and the land thereunder over its protest.
The controversy arose in 1985 when the Provincial Assessor of Zambales assessed the said properties as taxable
improvements. The assessment was appealed to the Board of Assessment Appeals of the Province of Zambales. On
August 24, 1988, the appeal was dismissed mainly on the ground of the petitioner's "failure to pay the realty taxes that fell
due during the pendency of the appeal."
The petitioner seasonably elevated the matter to the Central Board of Assessment Appeals, 1 one of the herein
respondents. In its decision dated March 22, 1990, the Board reversed the dismissal of the appeal but, on the merits,
agreed that "the tailings dam and the lands submerged thereunder (were) subject to realty tax."
For purposes of taxation the dam is considered as real property as it comes within the object mentioned
in paragraphs (a) and (b) of Article 415 of the New Civil Code. It is a construction adhered to the soil
which cannot be separated or detached without breaking the material or causing destruction on the land
upon which it is attached. The immovable nature of the dam as an improvement determines its character
as real property, hence taxable under Section 38 of the Real Property Tax Code. (P.D. 464).
Although the dam is partly used as an anti-pollution device, this Board cannot accede to the request for
tax exemption in the absence of a law authorizing the same.
xxx xxx xxx
We find the appraisal on the land submerged as a result of the construction of the tailings dam, covered
by Tax Declaration Nos.
002-0260 and 002-0266, to be in accordance with the Schedule of Market Values for Zambales which
was reviewed and allowed for use by the Ministry (Department) of Finance in the 1981-1982 general
revision. No serious attempt was made by Petitioner-Appellant Benguet Corporation to impugn its
reasonableness, i.e., that the P50.00 per square meter applied by Respondent-Appellee Provincial
Assessor is indeed excessive and unconscionable. Hence, we find no cause to disturb the market value
applied by Respondent Appellee Provincial Assessor of Zambales on the properties of PetitionerAppellant Benguet Corporation covered by Tax Declaration Nos. 002-0260 and 002-0266.
This petition for certiorari now seeks to reverse the above ruling.
The principal contention of the petitioner is that the tailings dam is not subject to realty tax because it is not an
"improvement" upon the land within the meaning of the Real Property Tax Code. More particularly, it is claimed
(1) as regards the tailings dam as an "improvement":
(a) that the tailings dam has no value separate from and independent of the mine; hence,
by itself it cannot be considered an improvement separately assessable;
(b) that it is an integral part of the mine;
(c) that at the end of the mining operation of the petitioner corporation in the area, the
tailings dam will benefit the local community by serving as an irrigation facility;
(d) that the building of the dam has stripped the property of any commercial value as the
property is submerged under water wastes from the mine;
(e) that the tailings dam is an environmental pollution control device for which petitioner
must be commended rather than penalized with a realty tax assessment;

(f) that the installation and utilization of the tailings dam as a pollution control device is a
requirement imposed by law;
(2) as regards the valuation of the tailings dam and the submerged lands:
(a) that the subject properties have no market value as they cannot be sold
independently of the mine;
(b) that the valuation of the tailings dam should be based on its incidental use by
petitioner as a water reservoir and not on the alleged cost of construction of the dam and
the annual build-up expense;
(c) that the "residual value formula" used by the Provincial Assessor and adopted by
respondent CBAA is arbitrary and erroneous; and
(3) as regards the petitioner's liability for penalties for
non-declaration of the tailings dam and the submerged lands for realty tax purposes:
(a) that where a tax is not paid in an honest belief that it is not due, no penalty shall be
collected in addition to the basic tax;
(b) that no other mining companies in the Philippines operating a tailings dam have been
made to declare the dam for realty tax purposes.
The petitioner does not dispute that the tailings dam may be considered realty within the meaning of Article 415. It insists,
however, that the dam cannot be subjected to realty tax as a separate and independent property because it does not
constitute an "assessable improvement" on the mine although a considerable sum may have been spent in constructing
and maintaining it.
To support its theory, the petitioner cites the following cases:
1. Municipality of Cotabato v. Santos (105 Phil. 963), where this Court considered the dikes and gates constructed by the
taxpayer in connection with a fishpond operation as integral parts of the fishpond.
2. Bislig Bay Lumber Co. v. Provincial Government of Surigao (100 Phil. 303), involving a road constructed by the timber
concessionaire in the area, where this Court did not impose a realty tax on the road primarily for two reasons:
In the first place, it cannot be disputed that the ownership of the road that was constructed by appellee
belongs to the government by right of accession not only because it is inherently incorporated or attached
to the timber land . . . but also because upon the expiration of the concession said road would ultimately
pass to the national government. . . . In the second place, while the road was constructed by appellee
primarily for its use and benefit, the privilege is not exclusive, for . . . appellee cannot prevent the use of
portions of the concession for homesteading purposes. It is also duty bound to allow the free use of forest
products within the concession for the personal use of individuals residing in or within the vicinity of the
land. . . . In other words, the government has practically reserved the rights to use the road to promote its
varied activities. Since, as above shown, the road in question cannot be considered as an improvement
which belongs to appellee, although in part is for its benefit, it is clear that the same cannot be the subject
of assessment within the meaning of Section 2 of C.A.
No. 470.
Apparently, the realty tax was not imposed not because the road was an integral part of the lumber concession but
because the government had the right to use the road to promote its varied activities.
3. Kendrick v. Twin Lakes Reservoir Co. (144 Pacific 884), an American case, where it was declared that the reservoir
dam went with and formed part of the reservoir and that the dam would be "worthless and useless except in connection
with the outlet canal, and the water rights in the reservoir represent and include whatever utility or value there is in the
dam and headgates."

4. Ontario Silver Mining Co. v. Hixon (164 Pacific 498), also from the United States. This case involved drain tunnels
constructed by plaintiff when it expanded its mining operations downward, resulting in a constantly increasing flow of
water in the said mine. It was held that:
Whatever value they have is connected with and in fact is an integral part of the mine itself. Just as much
so as any shaft which descends into the earth or an underground incline, tunnel, or drift would be which
was used in connection with the mine.
On the other hand, the Solicitor General argues that the dam is an assessable improvement because it enhances the
value and utility of the mine. The primary function of the dam is to receive, retain and hold the water coming from the
operations of the mine, and it also enables the petitioner to impound water, which is then recycled for use in the plant.
There is also ample jurisprudence to support this view, thus:
. . . The said equipment and machinery, as appurtenances to the gas station building or shed owned by
Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the operation of the gas
station, for without them the gas station would be useless and which have been attached or affixed
permanently to the gas station site or embedded therein, are taxable improvements and machinery within
the meaning of the Assessment Law and the Real Property Tax Code. (Caltex [Phil.] Inc. v. CBAA, 114
SCRA 296).
We hold that while the two storage tanks are not embedded in the land, they may, nevertheless, be
considered as improvements on the land, enhancing its utility and rendering it useful to the oil industry. It
is undeniable that the two tanks have been installed with some degree of permanence as receptacles for
the considerable quantities of oil needed by MERALCO for its operations. (Manila Electric Co. v. CBAA,
114 SCRA 273).
The pipeline system in question is indubitably a construction adhering to the soil. It is attached to the land
in such a way that it cannot be separated therefrom without dismantling the steel pipes which were
welded to form the pipeline. (MERALCO Securities Industrial Corp. v. CBAA, 114 SCRA 261).
The tax upon the dam was properly assessed to the plaintiff as a tax upon real estate. (Flax-Pond Water
Co. v. City of Lynn, 16 N.E. 742).
The oil tanks are structures within the statute, that they are designed and used by the owner as
permanent improvement of the free hold, and that for such reasons they were properly assessed by the
respondent taxing district as improvements. (Standard Oil Co. of New Jersey v. Atlantic City, 15 A 2d.
271)
The Real Property Tax Code does not carry a definition of "real property" and simply says that the realty tax is imposed on
"real property, such as lands, buildings, machinery and other improvements affixed or attached to real property." In the
absence of such a definition, we apply Article 415 of the Civil Code, the pertinent portions of which state:
Art. 415. The following are immovable property.
(1) Lands, buildings and constructions of all kinds adhered to the soil;
xxx xxx xxx
(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated
therefrom without breaking the material or deterioration of the object.
Section 2 of C.A. No. 470, otherwise known as the Assessment Law, provides that the realty tax is due "on the real
property, including land, buildings, machinery and other improvements" not specifically exempted in Section 3 thereof. A
reading of that section shows that the tailings dam of the petitioner does not fall under any of the classes of exempt real
properties therein enumerated.
Is the tailings dam an improvement on the mine? Section 3(k) of the Real Property Tax Code defines improvement as
follows:

(k) Improvements is a valuable addition made to property or an amelioration in its condition, amounting
to more than mere repairs or replacement of waste, costing labor or capital and intended to enhance its
value, beauty or utility or to adopt it for new or further purposes.
The term has also been interpreted as "artificial alterations of the physical condition of the ground that arereasonably
permanent in character." 2
The Court notes that in the Ontario case the plaintiff admitted that the mine involved therein could not be operated without
the aid of the drain tunnels, which were indispensable to the successful development and extraction of the minerals
therein. This is not true in the present case.
Even without the tailings dam, the petitioner's mining operation can still be carried out because the primary function of the
dam is merely to receive and retain the wastes and water coming from the mine. There is no allegation that the water
coming from the dam is the sole source of water for the mining operation so as to make the dam an integral part of the
mine. In fact, as a result of the construction of the dam, the petitioner can now impound and recycle water without having
to spend for the building of a water reservoir. And as the petitioner itself points out, even if the petitioner's mine is shut
down or ceases operation, the dam may still be used for irrigation of the surrounding areas, again unlike in the Ontario
case.
As correctly observed by the CBAA, the Kendrick case is also not applicable because it involved water reservoir dams
used for different purposes and for the benefit of the surrounding areas. By contrast, the tailings dam in question is being
used exclusively for the benefit of the petitioner.
Curiously, the petitioner, while vigorously arguing that the tailings dam has no separate existence, just as vigorously
contends that at the end of the mining operation the tailings dam will serve the local community as an irrigation facility,
thereby implying that it can exist independently of the mine.
From the definitions and the cases cited above, it would appear that whether a structure constitutes an improvement so as
to partake of the status of realty would depend upon the degree of permanence intended in its construction and use. The
expression "permanent" as applied to an improvement does not imply that the improvement must be used perpetually but
only until the purpose to which the principal realty is devoted has been accomplished. It is sufficient that the improvement
is intended to remain as long as the land to which it is annexed is still used for the said purpose.
The Court is convinced that the subject dam falls within the definition of an "improvement" because it is permanent in
character and it enhances both the value and utility of petitioner's mine. Moreover, the immovable nature of the dam
defines its character as real property under Article 415 of the Civil Code and thus makes it taxable under Section 38 of the
Real Property Tax Code.
The Court will also reject the contention that the appraisal at P50.00 per square meter made by the Provincial Assessor is
excessive and that his use of the "residual value formula" is arbitrary and erroneous.
Respondent Provincial Assessor explained the use of the "residual value formula" as follows:
A 50% residual value is applied in the computation because, while it is true that when slime fills the dike,
it will then be covered by another dike or stage, the stage covered is still there and still exists and since
only one face of the dike is filled, 50% or the other face is unutilized.
In sustaining this formula, the CBAA gave the following justification:
We find the appraisal on the land submerged as a result of the construction of the tailings dam, covered
by Tax Declaration Nos.
002-0260 and 002-0266, to be in accordance with the Schedule of Market Values for San Marcelino,
Zambales, which is fifty (50.00) pesos per square meter for third class industrial land (TSN, page 17, July
5, 1989) and Schedule of Market Values for Zambales which was reviewed and allowed for use by the
Ministry (Department) of Finance in the 1981-1982 general revision. No serious attempt was made by
Petitioner-Appellant Benguet Corporation to impugn its reasonableness, i.e, that the P50.00 per square
meter applied by Respondent-Appellee Provincial Assessor is indeed excessive and unconscionable.
Hence, we find no cause to disturb the market value applied by Respondent-Appellee Provincial Assessor
of Zambales on the properties of Petitioner-Appellant Benguet Corporation covered by Tax Declaration
Nos. 002-0260 and 002-0266.

It has been the long-standing policy of this Court to respect the conclusions of quasi-judicial agencies like the CBAA,
which, because of the nature of its functions and its frequent exercise thereof, has developed expertise in the resolution of
assessment problems. The only exception to this rule is where it is clearly shown that the administrative body has
committed grave abuse of discretion calling for the intervention of this Court in the exercise of its own powers of review.
There is no such showing in the case at bar.
We disagree, however, with the ruling of respondent CBAA that it cannot take cognizance of the issue of the propriety of
the penalties imposed upon it, which was raised by the petitioner for the first time only on appeal. The CBAA held that this
"is an entirely new matter that petitioner can take up with the Provincial Assessor (and) can be the subject of another
protest before the Local Board or a negotiation with the local sanggunian . . ., and in case of an adverse decision by either
the Local Board or the local sanggunian, (it can) elevate the same to this Board for appropriate action."
There is no need for this time-wasting procedure. The Court may resolve the issue in this petition instead of referring it
back to the local authorities. We have studied the facts and circumstances of this case as above discussed and find that
the petitioner has acted in good faith in questioning the assessment on the tailings dam and the land submerged
thereunder. It is clear that it has not done so for the purpose of evading or delaying the payment of the questioned tax.
Hence, we hold that the petitioner is not subject to penalty for its
non-declaration of the tailings dam and the submerged lands for realty tax purposes.
WHEREFORE, the petition is DISMISSED for failure to show that the questioned decision of respondent Central Board of
Assessment Appeals is tainted with grave abuse of discretion except as to the imposition of penalties upon the petitioner
which is hereby SET ASIDE. Costs against the petitioner. It is so ordered.

5. 61 PHIL 709
DAVAO SAW MILL CO., INC., vs. APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC.,
(G.R. No. L-40411, August 7, 1935)
The issue in this case, as announced in the opening sentence of the decision in the trial court and as set forth by counsel
for the parties on appeal, involves the determination of the nature of the properties described in the complaint. The trial
judge found that those properties were personal in nature, and as a consequence absolved the defendants from the
complaint, with costs against the plaintiff.
The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine Islands. It has
operated a sawmill in the sitio of Maa, barrio of Tigatu, municipality of Davao, Province of Davao. However, the land upon
which the business was conducted belonged to another person. On the land the sawmill company erected a building
which housed the machinery used by it. Some of the implements thus used were clearly personal property, the conflict
concerning machines which were placed and mounted on foundations of cement. In the contract of lease between the
sawmill company and the owner of the land 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 party of the first part without any
obligation on its part to pay any amount for said improvements and buildings; also, in the event the party of the
second part should leave or abandon the land leased before the time herein stipulated, the improvements and
buildings shall likewise pass to the ownership of the party of the first part as though the time agreed upon had
expired: Provided, however, That the machineries and accessories are not included in the improvements which
will pass to the party of the first part on the expiration or abandonment of the land leased.
In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill Co., Inc., was the
defendant, a judgment was rendered in favor of the plaintiff in that action against the defendant in that action; a writ of
execution issued thereon, and the properties now in question were levied upon as personalty by the sheriff. No third party
claim was filed for such properties at the time of the sales thereof as is borne out by the record made by the plaintiff
herein. Indeed the bidder, which was the plaintiff in that action, and the defendant herein having consummated the sale,
proceeded to take possession of the machinery and other properties described in the corresponding certificates of sale
executed in its favor by the sheriff of Davao.
As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has on a number of
occasions treated the machinery as personal property by executing chattel mortgages in favor of third persons. One of
such persons is the appellee by assignment from the original mortgages.
Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property consists of
1. Land, buildings, roads and constructions of all kinds adhering to the soil;
xxx

xxx

xxx

5. Machinery, liquid containers, instruments or implements intended 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 of such trade of industry.
Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain no doubt that the
trial judge and appellees are right in their appreciation of the legal doctrines flowing from the facts.
In the first place, it must again be pointed out that the appellant should have registered its protest before or at the time of
the sale of this property. It must further be pointed out that while not conclusive, the characterization of the property as
chattels by the appellant is indicative of intention and impresses upon the property the character determined by the
parties. In this connection the decision of this court in the case of Standard Oil Co. of New Yorkvs. Jaramillo ( [1923], 44
Phil., 630), whether obiter dicta or not, furnishes the key to such a situation.
It is, however not necessary to spend overly must time in the resolution of this appeal on side issues. It is machinery
which is involved; moreover, machinery not intended by the owner of any building or land for use in connection therewith,

but intended by a lessee for use in a building erected on the land by the latter to be returned to the lessee on the
expiration or abandonment of the lease.
A similar question arose in Puerto Rico, and on appeal being taken to the United States Supreme Court, it was held that
machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property
or plant, but not when so placed by a tenant, a usufructuary, or any person having only a temporary right, unless such
person acted as the agent of the owner. In the opinion written by Chief Justice White, whose knowledge of the Civil Law is
well known, it was in part said:
To determine this question involves fixing the nature and character of the property from the point of view of the
rights of Valdes and its nature and character from the point of view of Nevers & Callaghan as a judgment creditor
of the Altagracia Company and the rights derived by them from the execution levied on the machinery placed by
the corporation in the plant. Following the Code Napoleon, the Porto Rican Code treats as immovable (real)
property, not only land and buildings, but also attributes immovability in some cases to property of a movable
nature, that is, personal property, because of the destination to which it is applied. "Things," says section 334 of
the Porto Rican Code, "may be immovable either by their own nature or by their destination or the object to which
they are applicable." Numerous illustrations are given in the fifth subdivision of section 335, which is as follows:
"Machinery, vessels, instruments or implements intended by the owner of the tenements for the industrial or
works that they may carry on in any building or upon any land and which tend directly to meet the needs of the
said industry or works." (See also Code Nap., articles 516, 518 et seq. to and inclusive of article 534,
recapitulating the things which, though in themselves movable, may be immobilized.) So far as the subject-matter
with which we are dealing machinery placed in the plant it is plain, both under the provisions of the Porto
Rican Law and of the Code Napoleon, that machinery which is movable in its nature only becomes immobilized
when placed in a plant by the owner of the property or plant. Such result would not be accomplished, therefore, by
the placing of machinery in a plant by a tenant or a usufructuary or any person having only a temporary right.
(Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit. 2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and decisions
quoted in Fuzier-Herman ed. Code Napoleon under articles 522 et seq.) The distinction rests, as pointed out by
Demolombe, upon the fact that one only having a temporary right to the possession or enjoyment of property is
not presumed by the law to have applied movable property belonging to him so as to deprive him of it by causing
it by an act of immobilization to become the property of another. It follows that abstractly speaking the machinery
put by the Altagracia Company in the plant belonging to Sanchez did not lose its character of movable property
and become immovable by destination. But in the concrete immobilization took place because of the express
provisions of the lease under which the Altagracia held, since the lease in substance required the putting in of
improved machinery, deprived the tenant of any right to charge against the lessor the cost such machinery, and it
was expressly stipulated that the machinery so put in should become a part of the plant belonging to the owner
without compensation to the lessee. Under such conditions the tenant in putting in the machinery was acting but
as the agent of the owner in compliance with the obligations resting upon him, and the immobilization of the
machinery which resulted arose in legal effect from the act of the owner in giving by contract a permanent
destination to the machinery.
xxx

xxx

xxx

The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the plant by the Altagracia
Company, being, as regards Nevers & Callaghan, movable property, it follows that they had the right to levy on it
under the execution upon the judgment in their favor, and the exercise of that right did not in a legal sense conflict
with the claim of Valdes, since as to him the property was a part of the realty which, as the result of his obligations
under the lease, he could not, for the purpose of collecting his debt, proceed separately against. (Valdes vs.
Central Altagracia [192], 225 U.S., 58.)
Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of this instance to be paid
by the appellant.

6. 6 SCRA 197
MINDANAO BUS COMPANY vs. THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of
Cagayan de Oro City (G.R. No. L-17870, September 29, 1962)
This is a petition for the review of the decision of the Court of Tax Appeals in C.T.A. Case No. 710 holding that the
petitioner Mindanao Bus Company is liable to the payment of the realty tax on its maintenance and repair equipment
hereunder referred to.
Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioner's above-mentioned equipment.
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.
In the Court of Tax Appeals the parties submitted the following stipulation of facts:
Petitioner and respondents, thru their respective counsels agreed to the following stipulation of facts:
1. That petitioner is a public utility solely engaged in transporting passengers and cargoes by motor trucks, over
its authorized lines in the Island of Mindanao, collecting rates approved by the Public Service Commission;
2. That petitioner has its main office and shop at Cagayan de Oro City. It maintains Branch Offices and/or stations
at Iligan City, Lanao; Pagadian, Zamboanga del Sur; Davao City and Kibawe, Bukidnon Province;
3. That the machineries sought to be assessed by the respondent as real properties are the following:
(a) Hobart Electric Welder Machine, appearing in the attached photograph, marked Annex "A";
(b) Storm Boring Machine, appearing in the attached photograph, marked Annex "B";
(c) Lathe machine with motor, appearing in the attached photograph, marked Annex "C";
(d) Black and Decker Grinder, appearing in the attached photograph, marked Annex "D";
(e) PEMCO Hydraulic Press, appearing in the attached photograph, marked Annex "E";
(f) Battery charger (Tungar charge machine) appearing in the attached photograph, marked Annex "F";
and
(g) D-Engine Waukesha-M-Fuel, appearing in the attached photograph, marked Annex "G".
4. That these machineries are sitting on cement or wooden platforms as may be seen in the attached
photographs which form part of this agreed stipulation of facts;
5. That petitioner is the owner of the land where it maintains and operates a garage for its TPU motor trucks; a
repair shop; blacksmith and carpentry shops, and with these machineries which are placed therein, its TPU trucks
are made; body constructed; and same are repaired in a condition to be serviceable in the TPU land
transportation business it operates;
6. That these machineries have never been or were never used as industrial equipments to produce finished
products for sale, nor to repair machineries, parts and the like offered to the general public indiscriminately for
business or commercial purposes for which petitioner has never engaged in, to date.1awphl.nt
The Court of Tax Appeals having sustained the respondent city assessor's ruling, and having denied a motion for
reconsideration, petitioner brought the case to this Court assigning the following errors:
1. The Honorable Court of Tax Appeals erred in upholding respondents' contention that the questioned
assessments are valid; and that said tools, equipments or machineries are immovable taxable real properties.

2. 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.
3. The Court of Tax Appeals erred in denying petitioner's contention that the respondent City Assessor's power to
assess and levy real estate taxes on machineries is further restricted by section 31, paragraph (c) of Republic Act
No. 521; and
4. The Tax Court erred in denying petitioner's motion for reconsideration.
Respondents contend that said equipments, tho movable, are immobilized by destination, in accordance with paragraph 5
of Article 415 of the New Civil Code which provides:
Art. 415. The following are immovable properties:
xxx

xxx

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. (Emphasis ours.)
Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms. They can be
moved around and about in petitioner's repair shop. In the case of B. H. Berkenkotter vs. Cu Unjieng, 61 Phil. 663, the
Supreme Court said:
Article 344 (Now Art. 415), paragraph (5) of the Civil Code, gives the character of real property to "machinery,
liquid containers, instruments or implements intended 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 of
such trade or industry."
If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co., Inc., in
lieu of the other of less capacity existing therein, for its sugar and industry, converted them into real property by
reason of their purpose, it cannot be said that their incorporation therewith was not permanent in character
because, as essential and principle elements of a sugar central, without them the sugar central would be unable
to function or carry on the industrial purpose for which it was established. Inasmuch as the central is permanent in
character, the necessary machinery and equipment installed for carrying on the sugar industry for which it has
been established must necessarily be permanent. (Emphasis ours.)
So that movable equipments to be immobilized in contemplation of the law must first be "essential and principal elements"
of an industry or works without which such industry or works would be "unable to function or carry on the industrial
purpose for which it was established." We may here distinguish, therefore, those movable which become immobilized by
destination because they are essential and principal elements in the industry for those which may not be so considered
immobilized because they are merely incidental, not essential and principal. Thus, cash registers, typewriters, etc., usually
found and used in hotels, restaurants, theaters, etc. are merely incidentals and are not and should not be considered
immobilized by destination, for these businesses can continue or carry on their functions without these equity comments.
Airline companies use forklifts, jeep-wagons, pressure pumps, IBM machines, etc. which are incidentals, not essentials,
and thus retain their movable nature. On the other hand, machineries of breweries used in the manufacture of liquor and
soft drinks, though movable in nature, are immobilized because they are essential to said industries; but the delivery
trucks and adding machines which they usually own and use and are found within their industrial compounds are merely
incidental and retain their movable nature.
Similarly, the tools and equipments in question in this instant case are, by their nature, not essential and principle
municipal elements of petitioner's business of transporting passengers and cargoes by motor trucks. They are merely
incidentals acquired as movables and used only for expediency to facilitate and/or improve its service. Even without
such tools and equipments, its business may be carried on, as petitioner has carried on, without such equipments, before
the war. The transportation business could be carried on without the repair or service shop if its rolling equipment is
repaired or serviced in another shop belonging to another.
The law that governs the determination of the question at issue is as follows:

Art. 415. The following are immovable property:

xxx

xxx

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; (Civil Code of the Phil.)
Aside from the element of essentiality the above-quoted provision also requires that the industry or works be carried on in
a building or on a piece of land. Thus in the case of Berkenkotter vs. Cu Unjieng, supra, the "machinery, liquid containers,
and instruments or implements" are found in a building constructed on the land. A sawmill would also be installed in a
building on land more or less permanently, and the sawing is conducted in the land or building.
But in the case at bar the 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 equipments may not,
therefore, be deemed real property.
Resuming what we have set forth above, we hold that the equipments in question are not absolutely essential to the
petitioner's transportation business, and petitioner's business is not carried on in a building, tenement or on a specified
land, so said equipment may not be considered real estate within the meaning of Article 415 (c) of the Civil Code.
WHEREFORE, the decision subject of the petition for review is hereby set aside and the equipment in question declared
not subject to assessment as real estate for the purposes of the real estate tax. Without costs.
So ordered.

7. 61 PHIL 663
B.H. BERKENKOTTER vs. CU UNJIENG E HIJOS, YEK TONG LIN FIRE AND MARINE INSURANCE COMPANY,
MABALACAT SUGAR COMPANY and THE PROVINCE SHERIFF OF PAMPANGA
(G.R. No. L-41643, July 31, 1935)
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 Unjiengs e Hijos et al., with costs.
In support of his appeal, the appellant assigns six alleged errors as committed by the trial court in its decision in question
which will be discussed in the course of this decision.
The first question to be decided in this appeal, which is raised in the first assignment of alleged error, is whether or not the
lower court erred in declaring that the additional machinery and equipment, as improvement incorporated with the central
are subject to the mortgage deed executed in favor of the defendants Cu Unjieng e Hijos.
It is admitted by the parties that on April 26, 1926, the Mabalacat Sugar Co., Inc., owner of the sugar central situated in
Mabalacat, Pampanga, obtained from the defendants, Cu Unjieng e Hijos, a loan secured by a first mortgage constituted
on two parcels and land "with all its buildings, improvements, sugar-cane mill, steel railway, telephone line, apparatus,
utensils and whatever forms part or is necessary complement of said sugar-cane mill, steel railway, telephone line, now
existing or that may in the future exist is said lots."
On October 5, 1926, shortly after said mortgage had been constituted, the Mabalacat Sugar Co., Inc., 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. The estimated cost of said additional machinery and equipment was approximately P100,000. In order
to carry out this plan, B.A. Green, president of said corporation, proposed to the plaintiff, B.H. Berkenkotter, to advance
the necessary amount for the purchase of said machinery and equipment, promising to reimburse him as soon as he
could obtain an additional loan from the mortgagees, the herein defendants Cu Unjieng e Hijos. Having agreed to said
proposition made in a letter dated October 5, 1926 (Exhibit E), B.H. Berkenkotter, on October 9th of the same year,
delivered the sum of P1,710 to B.A. Green, president of the Mabalacat Sugar Co., Inc., the total amount supplied by him
to said B.A. Green having been P25,750. Furthermore, B.H. Berkenkotter had a credit of P22,000 against said corporation
for 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 now in litigation.
On June 10, 1927, B.A. Green, president of the Mabalacat Sugar Co., Inc., applied to Cu Unjieng e Hijos for an additional
loan of P75,000 offering as security the additional machinery and equipment acquired by said B.A. Green and installed in
the sugar central after the execution of the original mortgage deed, on April 27, 1927, together with whatever additional
equipment acquired with said loan. B.A. Green failed to obtain said loan.
Article 1877 of the Civil Code provides as follows.
ART. 1877. A mortgage includes all natural accessions, improvements, growing fruits, and rents not collected
when the obligation falls due, and the amount of any indemnities paid or due the owner by the insurers of the
mortgaged property or by virtue of the exercise of the power of eminent domain, with the declarations,
amplifications, and limitations established by law, whether the estate continues in the possession of the person
who mortgaged it or whether it passes into the hands of a third person.
In the case of Bischoff vs. Pomar and Compaia General de Tabacos (12 Phil., 690), cited with approval in the case
of Cea vs. Villanueva (18 Phil., 538), this court laid shown the following doctrine:
1. REALTY; MORTGAGE OF REAL ESTATE INCLUDES IMPROVEMENTS AND FIXTURES. It is a rule,
established by the Civil Code and also by the Mortgage Law, with which the decisions of the courts of the United
States are in accord, that in a mortgage of real estate, the improvements on the same are included; therefore, all
objects permanently attached to a mortgaged building or land, although they may have been placed there after
the mortgage was constituted, are also included. (Arts. 110 and 111 of the Mortgage Law, and 1877 of the Civil
Code; decision of U.S. Supreme Court in the matter of Royal Insurance Co. vs. R. Miller, liquidator, and Amadeo
[26 Sup. Ct. Rep., 46; 199 U.S., 353].)

2. ID.; ID.; INCLUSION OR EXCLUSION OF MACHINERY, ETC. In order that it may be understood that the
machinery and other objects placed upon and used in connection with a mortgaged estate are excluded from the
mortgage, when it was stated in the mortgage that the improvements, buildings, and machinery that existed
thereon were also comprehended, it is indispensable that the exclusion thereof be stipulated between the
contracting parties.
The appellant contends that the installation of the machinery and equipment claimed by him in the sugar central of the
Mabalacat Sugar Company, Inc., was not permanent in character inasmuch as B.A. Green, in proposing to him to
advance the money for the purchase thereof, made it appear in the letter, Exhibit E, that in case B.A. Green should fail to
obtain an additional loan from the defendants Cu Unjieng e Hijos, said machinery and equipment would become security
therefor, said B.A. Green binding himself not to mortgage nor encumber them to anybody until said plaintiff be fully
reimbursed for the corporation's indebtedness to him.
Upon acquiring the machinery and equipment in question with money obtained as loan from the plaintiff-appellant by B.A.
Green, as president of the Mabalacat Sugar Co., Inc., the latter became owner of said machinery and equipment,
otherwise B.A. Green, as such president, could not have offered them to the plaintiff as security for the payment of his
credit.
Article 334, paragraph 5, of the Civil Code gives the character of real property to "machinery, liquid containers,
instruments or implements intended 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 of such trade or industry.
If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co., Inc., in lieu of the
other of less capacity existing therein, for its sugar industry, converted them into real property by reason of their purpose,
it cannot be said that their incorporation therewith was not permanent in character because, as essential and principal
elements of a sugar central, without them the sugar central would be unable to function or carry on the industrial purpose
for which it was established. Inasmuch as the central is permanent in character, the necessary machinery and equipment
installed for carrying on the sugar industry for which it has been established must necessarily be permanent.
Furthermore, the fact that B.A. Green bound himself to the plaintiff B.H. Berkenkotter to hold said machinery and
equipment as security for the payment of the latter's credit and to refrain from mortgaging or otherwise encumbering them
until Berkenkotter has been fully reimbursed therefor, is not incompatible with the permanent character of the
incorporation of said machinery and equipment with the sugar central of the Mabalacat Sugar Co., Inc., as nothing could
prevent B.A. Green from giving them as security at least under a second mortgage.
As to the alleged sale of said machinery and equipment to the plaintiff and appellant after they had been permanently
incorporated with sugar central of the Mabalacat Sugar Co., Inc., and while the mortgage constituted on said sugar central
to Cu Unjieng e Hijos remained in force, only the right of redemption of the vendor Mabalacat Sugar Co., Inc., in the sugar
central with which said machinery and equipment had been incorporated, was transferred thereby, subject to the right of
the defendants Cu Unjieng e Hijos under the first mortgage.
For the foregoing considerations, we are of the opinion and so hold: (1) That the installation of a machinery and
equipment in a mortgaged sugar central, in lieu of another of less capacity, for the purpose of carrying out the industrial
functions of the latter and increasing production, constitutes a permanent improvement on said sugar central and subjects
said machinery and equipment to the mortgage constituted thereon (article 1877, Civil Code); (2) that the fact that the
purchaser of the new machinery and equipment has bound himself to the person supplying him the purchase money to
hold them as security for the payment of the latter's credit, and to refrain from mortgaging or otherwise encumbering them
does not alter the permanent character of the incorporation of said machinery and equipment with the central; and (3) that
the sale of the machinery and equipment in question by the purchaser who was supplied the purchase money, as a loan,
to the person who supplied the money, after the incorporation thereof with the mortgaged sugar central, does not vest the
creditor with ownership of said machinery and equipment but simply with the right of redemption.
Wherefore, finding no error in the appealed judgment, it is affirmed in all its parts, with costs to the appellant. So ordered.

8. 6 SCRA 530
PASTOR D. AGO vs.THE HON. COURT OF APPEALS, HON. MONTANO A. ORTIZ, Judge of the Court of First
Instance of Agusan, THE PROVINCIAL SHERIFF OF SURIGAO and GRACE PARK ENGINEERING, INC., (G.R. No.
L-17898, October 31, 1962)
Appeal by certiorari to review the decision of respondent Court of Appeals in CA-G.R. No. 26723-R entitled "Pastor D.
Ago vs. The Provincial Sheriff of Surigao, et al." which in part reads:
In this case for certiorari and prohibition with preliminary injunction, it appears from the records that the
respondent Judge of the Court of First Instance of Agusan rendered judgment (Annex "A") in open court on
January 28, 1959, basing said judgment on a compromise agreement between the parties.
On August 15, 1959, upon petition, the Court of First Instance issued a writ of execution.
Petitioner's motion for reconsideration dated October 12, 1959 alleges that he, or his counsel, did not receive a
formal and valid notice of said decision, which motion for reconsideration was denied by the court below in the
order of November 14, 1959.
Petitioner now contends that the respondent Judge exceeded in his jurisdiction in rendering the execution without
valid and formal notice of the decision.
A compromise agreement is binding between the parties and becomes the law between them. (Gonzales vs.
Gonzales G.R. No. L-1254, May 21, 1948, 81 Phil. 38; Martin vs. Martin, G.R. No. L-12439, May 22, 1959) .
It is a general rule in this jurisdiction that a judgment based on a compromise agreement is not appealable and is
immediately executory, unless a motion is filed on the ground fraud, mistake or duress. (De los Reyes vs. Ugarte,
75 Phil. 505; Lapena vs. Morfe, G.R. No. L-10089, July 31, 1957)
Petitioner's claim that he was not notified or served notice of the decision is untenable. The judgment on the
compromise agreement rendered by the court below dated January 28, 1959, was given in open court. This alone
is a substantial compliance as to notice. (De los Reyes vs. Ugarte, supra)
IN VIEW THEREOF, we believe that the lower court did not exceed nor abuse its jurisdiction in ordering the
execution of the judgment. The petition for certiorari is hereby dismissed and the writ of preliminary injunction
heretofore dissolved, with costs against the petitioner.
IT IS SO ORDERED.
The facts of the case may be briefly stated as follows: In 1957, petitioner Pastor D. Ago bought sawmill machineries and
equipments from respondent Grace Park Engineer domineering, Inc., executing a chattel mortgage over said machineries
and equipments to secure the payment of balance of the price remaining unpaid of P32,000.00, which petitioner agreed to
pay on installment basis.
Petitioner Ago defaulted in his payment and so, in 1958 respondent Grace Park Engineering, Inc. instituted extra-judicial
foreclosure proceedings of the mortgage. To enjoin said foreclosure, petitioner herein instituted Special Civil Case No. 53
in the Court of First Instance of Agusan. The parties to the case arrived at a compromise agreement and submitted the
same in court in writing, signed by Pastor D. Ago and the Grace Park Engineering, Inc. The Hon. Montano A. Ortiz, Judge
of the Court of First Instance of Agusan, then presiding, dictated a decision in open court on January 28, 1959.
Petitioner continued to default in his payments as provided in the judgment by compromise, so Grace Park Engineering,
Inc. filed with the lower court a motion for execution, which was granted by the court on August 15, 1959. A writ of
execution, dated September 23, 1959, later followed.
The herein respondent, Provincial Sheriff of Surigao, acting upon the writ of execution issued by the lower court, levied
upon and ordered the sale of the sawmill machineries and equipments in question. These machineries and equipments
had been taken to and installed in a sawmill building located in Lianga, Surigao del Sur, and owned by the Golden Pacific
Sawmill, Inc., to whom, petitioner alleges, he had sold them on February 16, 1959 (a date after the decision of the lower
court but before levy by the Sheriff).

Having been advised by the sheriff that the public auction sale was set for December 4, 1959, petitioner, on December 1,
1959, filed the petition for certiorari and prohibition with preliminary injunction with respondent Court of Appeals, alleging
that a copy of the aforementioned judgment given in open court on January 28, 1959 was served upon counsel for
petitioner only on September 25, 1959 (writ of execution is dated September 23, 1959); that the order and writ of
execution having been issued by the lower court before counsel for petitioner received a copy of the judgment, its
resultant last order that the "sheriff may now proceed with the sale of the properties levied constituted a grave abuse of
discretion and was in excess of its jurisdiction; and that the respondent Provincial Sheriff of Surigao was acting illegally
upon the allegedly void writ of execution by levying the same upon the sawmill machineries and equipments which have
become real properties of the Golden Pacific sawmill, Inc., and is about to proceed in selling the same without prior
publication of the notice of sale thereof in some newspaper of general circulation as required by the Rules of Court.
The Court of Appeals, on December 8, 1959, issued a writ of preliminary injunction against the sheriff but it turned out that
the latter had already sold at public auction the machineries in question, on December 4, 1959, as scheduled. The
respondent Grace Park Engineering, Inc. was the only bidder for P15,000.00, although the certificate sale was not yet
executed. The Court of Appeals constructed the sheriff to suspend the issuance of a certificate of sale of the said sawmill
machineries and equipment sold by him on December 4, 1959 until the final decision of the case. On November 9, 1960
the Court of Appeals rendered the aforequoted decision.
Before this Court, petitioner alleges that the Court of Appeals erred (1) in holding that the rendition of judgment on
compromise in open court on January 1959 was a sufficient notice; and (2) in not resolving the other issues raised before
it, namely, (a) the legality of the public auction sale made by the sheriff, and (b) the nature of the machineries in question,
whether they are movables or immovables.
The Court of Appeals held that as a judgment was entered by the court below in open court upon the submission of the
compromise agreement, the parties may be considered as having been notified of said judgment and this fact constitutes
due notice of said judgment. This raises the following legal question: Is the order dictated in open court of the judgment of
the court, and is the fact the petitioner herein was present in open court was the judgment was dictated, sufficient notice
thereof? The provisions of the Rules of Court decree otherwise. Section 1 of Rule 35 describes the manner in which
judgment shall be rendered, thus:
SECTION 1. How judgment rendered. All judgments determining the merits of cases shall be in writing
personally and directly prepared by the judge, and signed by him, stating clearly and distinctly the facts and the
law on which it is based, filed with the clerk of the court.
The court of first instance being a court of record, in order that a judgment may be considered as rendered, must not only
be in writing, signed by the judge, but it must also be filed with the clerk of court. The mere pronouncement of the
judgment in open court with the stenographer taking note thereof does not, therefore, constitute a rendition of the
judgment. It is the filing of the signed decision with the clerk of court that constitutes rendition. While it is to be presumed
that the judgment that was dictated in open court will be the judgment of the court, the court may still modify said order as
the same is being put into writing. And even if the order or judgment has already been put into writing and signed, while it
has not yet been delivered to the clerk for filing it is still subject to amendment or change by the judge. It is only when the
judgment signed by the judge is actually filed with the clerk of court that it becomes a valid and binding judgment. Prior
thereto, it could still be subject to amendment and change and may not, therefore, constitute the real judgment of the
court.
Regarding the notice of judgment, the mere fact that a party heard the judge dictating the judgment in open court, is not a
valid notice of said judgment. If rendition thereof is constituted by the filing with the clerk of court of a signed copy (of the
judgment), it is evident that the fact that a party or an attorney heard the order or judgment being dictated in court cannot
be considered as notice of the real judgment. No judgment can be notified to the parties unless it has previously been
rendered. The notice, therefore, that a party has of a judgment that was being dictated is of no effect because at the time
no judgment has as yet been signed by the judge and filed with the clerk.
Besides, the Rules expressly require that final orders or judgments be served personally or by registered mail. Section 7
of Rule 27 provides as follows:
SEC. 7. Service of final orders or judgments. Final orders or judgments shall be served either personally or by
registered mail.
In accordance with this provision, a party is not considered as having been served with the judgment merely because he
heard the judgment dictating the said judgment in open court; it is necessary that he be served with a copy of the signed

judgment that has been filed with the clerk in order that he may legally be considered as having been served with the
judgment.
For all the foregoing, the fact that the petitioner herein heard the trial judge dictating the judgment in open court, is not
sufficient to constitute the service of judgement as required by the above-quoted section 7 of Rule 2 the signed judgment
not having been served upon the petitioner, said judgment could not be effective upon him (petitioner) who had not
received it. It follows as a consequence that the issuance of the writ of execution null and void, having been issued before
petitioner her was served, personally or by registered mail, a copy of the decision.
The second question raised in this appeal, which has been passed upon by the Court of Appeals, concerns the validity of
the proceedings of the sheriff in selling the sawmill machineries and equipments at public auction with a notice of the sale
having been previously published.
The record shows that after petitioner herein Pastor D. Ago had purchased the sawmill machineries and equipments he
assigned the same to the Golden Pacific Sawmill, Inc. in payment of his subscription to the shares of stock of said
corporation. Thereafter the sawmill machinery and equipments were installed in a building and permanently attached to
the ground. By reason of such installment in a building, the said sawmill machineries and equipment became real estate
properties in accordance with the provision of Art. 415 (5) of the Civil Code, thus:
ART. 415. The following are immovable property:
xxx

xxx

xxx

(5) Machinery, receptacles, instruments or implements tended 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;
This Court in interpreting a similar question raised before it in the case of Berkenkotter vs. Cu Unjieng e Hijos, 61 Phil.
683, held that the installation of the machine and equipment in the central of the Mabalacat Sugar Co., Inc. for use in
connection with the industry carried by the company, converted the said machinery and equipment into real estate by
reason of their purpose. Paraphrasing language of said decision we hold that by the installment of the sawmill
machineries in the building of the Gold Pacific Sawmill, Inc., for use in the sawing of logs carried on in said building, the
same became a necessary and permanent part of the building or real estate on which the same was constructed,
converting the said machineries and equipments into real estate within the meaning of Article 415(5) above-quoted of the
Civil Code of the Philippines.
Considering that the machineries and equipments in question valued at more than P15,000.00 appear to have been sold
without the necessary advertisement of sale by publication in a newspaper, as required in Sec. 16 of Rule 39 of the Rules
of Court, which is as follows:
SEC. 16. Notice of sale of property on execution. Before the sale of property on execution, notice thereof must
be given as follows:
xxx

xxx

xxx

(c) In case of real property, by posting a similar notice particularly describing the property for twenty days in three
public places in the municipality or city where the property is situated, and also where the property is to be sold,
and, if the assessed value of the property exceeds four hundred pesos, by publishing a copy of the notice once a
week, for the same period, in some newspaper published or having general circulation in the province, if there be
one. If there are newspapers published in the province in both the English and Spanish languages, then a like
publication for a like period shall be made in one newspaper published in the English language, and in one
published in the Spanish language.
the sale made by the sheriff must be declared null and void.
WHEREFORE, the decision of the Court of Appeals sought to be reviewed is hereby set aside and We declare that the
issuance of the writ of execution in this case against the sawmill machineries and equipments purchased by petitioner
Pastor D. Ago from the Grace Park Engineering, Inc., as well as the sale of the same by the Sheriff of Surigao, are null
and void. Costs shall be against the respondent Grace Park Engineering, Inc.

9. 122 SCRA 296

MAKATI LEASING and FINANCE CORPORATION vs. WEAREVER TEXTILE MILLS, INC., and HONORABLE
COURT OF APPEALS (G.R. No. L-58469 May 16, 1983)
Petition for review on certiorari of the decision of the Court of Appeals (now Intermediate Appellate Court) promulgated on
August 27, 1981 in CA-G.R. No. SP-12731, setting aside certain Orders later specified herein, of Judge Ricardo J.
Francisco, as Presiding Judge of the Court of First instance of Rizal Branch VI, issued in Civil Case No. 36040, as wen as
the resolution dated September 22, 1981 of the said appellate court, denying petitioner's motion for reconsideration.
It appears that in order to obtain financial accommodations from herein petitioner Makati Leasing and Finance
Corporation, the private respondent Wearever Textile Mills, Inc., discounted and assigned several receivables with the
former under a Receivable Purchase Agreement. To secure the collection of the receivables assigned, private respondent
executed a Chattel Mortgage over certain raw materials inventory as well as a machinery described as an Artos Aero
Dryer Stentering Range.
Upon private respondent's default, petitioner filed a petition for extrajudicial foreclosure of the properties mortgage to it.
However, the Deputy Sheriff assigned to implement the foreclosure failed to gain entry into private respondent's premises
and was not able to effect the seizure of the aforedescribed machinery. Petitioner thereafter filed a complaint for judicial
foreclosure with the Court of First Instance of Rizal, Branch VI, docketed as Civil Case No. 36040, the case before the
lower court.
Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the enforcement of which was
however subsequently restrained upon private respondent's filing of a motion for reconsideration. After several incidents,
the lower court finally issued on February 11, 1981, an order lifting the restraining order for the enforcement of the writ of
seizure and an order to break open the premises of private respondent to enforce said writ. The lower court reaffirmed its
stand upon private respondent's filing of a further motion for reconsideration.
On July 13, 1981, the sheriff enforcing the seizure order, repaired to the premises of private respondent and removed the
main drive motor of the subject machinery.
The Court of Appeals, in certiorari and prohibition proceedings subsequently filed by herein private respondent, set aside
the Orders of the lower court and ordered the return of the drive motor seized by the sheriff pursuant to said Orders, after
ruling that the machinery in suit cannot be the subject of replevin, much less of a chattel mortgage, because it is a real
property pursuant to Article 415 of the new Civil Code, the same being attached to the ground by means of bolts and the
only way to remove it from respondent's plant would be to drill out or destroy the concrete floor, the reason why all that the
sheriff could do to enfore the writ was to take the main drive motor of said machinery. The appellate court rejected
petitioner's argument that private respondent is estopped from claiming that the machine is real property by constituting a
chattel mortgage thereon.
A motion for reconsideration of this decision of the Court of Appeals having been denied, petitioner has brought the case
to this Court for review by writ of certiorari. It is contended by private respondent, however, that the instant petition was
rendered moot and academic by petitioner's act of returning the subject motor drive of respondent's machinery after the
Court of Appeals' decision was promulgated.
The contention of private respondent is without merit. When petitioner returned the subject motor drive, it made itself
unequivocably clear that said action was without prejudice to a motion for reconsideration of the Court of Appeals
decision, as shown by the receipt duly signed by respondent's representative. 1 Considering that petitioner has reserved
its right to question the propriety of the Court of Appeals' decision, the contention of private respondent that this petition
has been mooted by such return may not be sustained.
The next and the more crucial question to be resolved in this Petition is whether the machinery in suit is real or personal
property from the point of view of the parties, with petitioner arguing that it is a personality, while the respondent claiming
the contrary, and was sustained by the appellate court, which accordingly held that the chattel mortgage constituted
thereon is null and void, as contended by said respondent.
A similar, if not Identical issue was raised in Tumalad v. Vicencio, 41 SCRA 143 where this Court, speaking through
Justice J.B.L. Reyes, ruled:

Although there is no specific statement referring to the subject house as personal property, yet by ceding,
selling or transferring a property by way of chattel mortgage defendants-appellants could only have meant
to convey the house as chattel, or at least, intended to treat the same as such, so that they should not
now be allowed to make an inconsistent stand by claiming otherwise. Moreover, the subject house stood
on a rented lot to which defendants-appellants merely had a temporary right as lessee, and although this
can not in itself alone determine the status of the property, it does so when combined with other factors to
sustain the interpretation that the parties, particularly the mortgagors, intended to treat the house as
personality. Finally, unlike in the Iya cases, Lopez vs. Orosa, Jr. & Plaza Theatre, Inc. & Leung Yee vs.
F.L. Strong Machinery & Williamson, wherein third persons assailed the validity of the chattel mortgage, it
is the defendants-appellants themselves, as debtors-mortgagors, who are attacking the validity of the
chattel mortgage in this case. The doctrine of estoppel therefore applies to the herein defendantsappellants, having treated the subject house as personality.
Examining the records of the instant case, We find no logical justification to exclude the rule out, as the appellate court
did, the present case from the application of the abovequoted pronouncement. If a house of strong materials, like what
was involved in the above Tumalad case, may be considered as personal property for purposes of executing a chattel
mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby,
there is absolutely no reason why a machinery, which is movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as such. This is really because one who has so agreed is estopped
from denying the existence of the chattel mortgage.
In rejecting petitioner's assertion on the applicability of the Tumalad doctrine, the Court of Appeals lays stress on the fact
that the house involved therein was built on a land that did not belong to the owner of such house. But the law makes no
distinction with respect to the ownership of the land on which the house is built and We should not lay down distinctions
not contemplated by law.
It must be pointed out that the characterization of the subject machinery as chattel by the private respondent is indicative
of intention and impresses upon the property the character determined by the parties. As stated inStandard Oil Co. of
New York v. Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract may by agreement treat as personal
property that which by nature would be real property, as long as no interest of third parties would be prejudiced thereby.
Private respondent contends that estoppel cannot apply against it because it had never represented nor agreed that the
machinery in suit be considered as personal property but was merely required and dictated on by herein petitioner to sign
a printed form of chattel mortgage which was in a blank form at the time of signing. This contention lacks persuasiveness.
As aptly pointed out by petitioner and not denied by the respondent, the status of the subject machinery as movable or
immovable was never placed in issue before the lower court and the Court of Appeals except in a supplemental
memorandum in support of the petition filed in the appellate court. Moreover, even granting that the charge is true, such
fact alone does not render a contract void ab initio, but can only be a ground for rendering said contract voidable, or
annullable pursuant to Article 1390 of the new Civil Code, by a proper action in court. There is nothing on record to show
that the mortgage has been annulled. Neither is it disclosed that steps were taken to nullify the same. On the other hand,
as pointed out by petitioner and again not refuted by respondent, the latter has indubitably benefited from said contract.
Equity dictates that one should not benefit at the expense of another. Private respondent could not now therefore, be
allowed to impugn the efficacy of the chattel mortgage after it has benefited therefrom,
From what has been said above, the error of the appellate court in ruling that the questioned machinery is real, not
personal property, becomes very apparent. Moreover, the case of Machinery and Engineering Supplies, Inc. v. CA, 96
Phil. 70, heavily relied upon by said court is not applicable to the case at bar, the nature of the machinery and equipment
involved therein as real properties never having been disputed nor in issue, and they were not the subject of a Chattel
Mortgage. Undoubtedly, the Tumalad case bears more nearly perfect parity with the instant case to be the more
controlling jurisprudential authority.
WHEREFORE, the questioned decision and resolution of the Court of Appeals are hereby reversed and set aside, and the
Orders of the lower court are hereby reinstated, with costs against the private respondent.
SO ORDERED.

10. 20 SCRA 84
PEOPLE'S BANK AND TRUST CO. and ATLANTIC GULF AND PACIFIC CO. OF MANILA vs. DAHICAN LUMBER
COMPANY, DAHICAN AMERICAN LUMBER CORPORATION and CONNELL BROS. CO. (PHIL.)
(G.R. No. L-17500, May 16, 1967)
On September 8, 1948, Atlantic Gulf & Pacific Company of Manila, a West Virginia corporation licensed to do business in
the Philippines hereinafter referred to as ATLANTIC sold and assigned all its rights in the Dahican Lumber
concession to Dahican Lumber Company hereinafter referred to as DALCO for the total sum of $500,000.00, of
which only the amount of $50,000.00 was paid. Thereafter, to develop the concession, DALCO obtained various loans
from the People's Bank & Trust Company hereinafter referred to as the BANK amounting, as of July 13, 1950, to
P200,000.00. In addition, DALCO obtained, through the BANK, a loan of $250,000.00 from the Export-Import Bank of
Washington D.C., evidenced by five promissory notes of $50,000.00 each, maturing on different dates, executed by both
DALCO and the Dahican America Lumber Corporation, a foreign corporation and a stockholder of DALCO, hereinafter
referred to as DAMCO, all payable to the BANK or its order.
As security for the payment of the abovementioned loans, on July 13, 1950 DALCO executed in favor of the BANK the
latter acting for itself and as trustee for the Export-Import Bank of Washington D.C. a deed of mortgage covering five
parcels of land situated in the province of Camarines Norte together with all the buildings and other improvements existing
thereon and all the personal properties of the mortgagor located in its place of business in the municipalities of Mambulao
and Capalonga, Camarines Norte (Exhibit D). On the same date, DALCO executed a second mortgage on the same
properties in favor of ATLANTIC to secure payment of the unpaid balance of the sale price of the lumber concession
amounting to the sum of $450,000.00 (Exhibit G). Both deeds contained the following provision extending the mortgage
lien to properties to be subsequently acquired referred to hereafter as "after acquired properties" by the mortgagor:
All property of every nature and description taken in exchange or replacement, and all buildings, machinery,
fixtures, tools equipment and other property which the Mortgagor may hereafter acquire, construct, install, attach,
or use in, to, upon, or in connection with the premises, shall immediately be and become subject to the lien of this
mortgage in the same manner and to the same extent as if now included therein, and the Mortgagor shall from
time to time during the existence of this mortgage furnish the Mortgagee with an accurate inventory of such
substituted and subsequently acquired property.
Both mortgages were registered in the Office of the Register of Deeds of Camarines Norte. In addition thereto DALCO
and DAMCO pledged to the BANK 7,296 shares of stock of DALCO and 9,286 shares of DAMCO to secure the same
obligations.
Upon DALCO's and DAMCO's failure to pay the fifth promissory note upon its maturity, the BANK paid the same to the
Export-Import Bank of Washington D.C., and the latter assigned to the former its credit and the first mortgage securing it.
Subsequently, the BANK gave DALCO and DAMCO up to April 1, 1953 to pay the overdue promissory note.
After July 13, 1950 the date of execution of the mortgages mentioned above DALCO purchased various
machineries, equipment, spare parts and supplies in addition to, or in replacement of some of those already owned and
used by it on the date aforesaid. Pursuant to the provision of the mortgage deeds quoted theretofore regarding "after
acquired properties," the BANK requested DALCO to submit complete lists of said properties but the latter failed to do so.
In connection with these purchases, there appeared in the books of DALCO as due to Connell Bros. Company
(Philippines) a domestic corporation who was acting as the general purchasing agent of DALCO thereinafter called
CONNELL the sum of P452,860.55 and to DAMCO, the sum of P2,151,678.34.
On December 16, 1952, the Board of Directors of DALCO, in a special meeting called for the purpose, passed a
resolution agreeing to rescind the alleged sales of equipment, spare parts and supplies by CONNELL and DAMCO to it.
Thereafter, the corresponding agreements of rescission of sale were executed between DALCO and DAMCO, on the one
hand and between DALCO and CONNELL, on the other.
On January 13, 1953, the BANK, in its own behalf and that of ATLANTIC, demanded that said agreements be cancelled
but CONNELL and DAMCO refused to do so. As a result, on February 12, 1953; ATLANTIC and the BANK, commenced
foreclosure proceedings in the Court of First Instance of Camarines Norte against DALCO and DAMCO. On the same
date they filed an ex-parte application for the appointment of a Receiver and/or for the issuance of a writ of preliminary
injunction to restrain DALCO from removing its properties. The court granted both remedies and appointed George H.

Evans as Receiver. Upon defendants' motion, however, the court, in its order of February 21, 1953, discharged the
Receiver.
On March 2, 1953, defendants filed their answer denying the material allegations of the complaint and alleging several
affirmative defenses and a counterclaim.
On March 4 of the same year, CONNELL, filed a motion for intervention alleging that it was the owner and possessor of
some of the equipments, spare parts and supplies which DALCO had acquired subsequent to the execution of the
mortgages sought to be foreclosed and which plaintiffs claimed were covered by the lien. In its order of March 18,1953 the
Court granted the motion, as well as plaintiffs' motion to set aside the order discharging the Receiver. Consequently,
Evans was reinstated.
On April 1, 1953, CONNELL filed its answer denying the material averment of the complaint, and asserting affirmative
defenses and a counterclaim.
Upon motion of the parties the Court, on September 30, 1953, issued an order transferring the venue of the action to the
Court of First Instance of Manila where it was docketed as Civil Case No. 20987.
On August 30, 1958, upon motion of all the parties, the Court ordered the sale of all the machineries, equipment and
supplies of DALCO, and the same were subsequently sold for a total consideration of P175,000.00 which was deposited
in court pending final determination of the action. By a similar agreement one-half (P87,500.00) of this amount was
considered as representing the proceeds obtained from the sale of the "undebated properties" (those not claimed by
DAMCO and CONNELL), and the other half as representing those obtained from the sale of the "after acquired
properties".
After due trial, the Court, on July 15, 1960, rendered judgment as follows:
IN VIEW WHEREFORE, the Court:
1. Condemns Dahican Lumber Co. to pay unto People's Bank the sum of P200,000,00 with 7% interest per
annum from July 13, 1950, Plus another sum of P100,000.00 with 5% interest per annum from July 13, 1950; plus
10% on both principal sums as attorney's fees;
2. Condemns Dahican Lumber Co. to pay unto Atlantic Gulf the sum of P900,000.00 with 4% interest per annum
from July 3, 1950, plus 10% on both principal as attorney's fees;
3. Condemns Dahican Lumber Co. to pay unto Connell Bros, the sum of P425,860.55, and to pay unto Dahican
American Lumber Co. the sum of P2,151,678.24 both with legal interest from the date of the filing of the
respective answers of those parties, 10% of the principals as attorney's fees;
4. Orders that of the sum realized from the sale of the properties of P175,000.00, after deducting the recognized
expenses, one-half thereof be adjudicated unto plaintiffs, the court no longer specifying the share of each
because of that announced intention under the stipulation of facts to "pool their resources"; as to the other onehalf, the same should be adjudicated unto both plaintiffs, and defendant Dahican American and Connell Bros. in
the proportion already set forth on page 9, lines 21, 22 and 23 of the body of this decision; but with the
understanding that whatever plaintiffs and Dahican American and Connell Bros. should receive from the
P175,000.00 deposited in the Court shall be applied to the judgments particularly rendered in favor of each;
5. No other pronouncement as to costs; but the costs of the receivership as to the debated properties shall be
borne by People's Bank, Atlantic Gulf, Connell Bros., and Dahican American Lumber Co., pro-rata.
On the following day, the Court issued the following supplementary decision:
IN VIEW WHEREOF, the dispositive part of the decision is hereby amended in order to add the following
paragraph 6:
6. If the sums mentioned in paragraphs 1 and 2 are not paid within ninety (90) days, the Court orders the sale at
public auction of the lands object of the mortgages to satisfy the said mortgages and costs of foreclosure.

From the above-quoted decision, all the parties appealed.

Main contentions of plaintiffs as appellants are the following: that the "after acquired properties" were subject to the deeds
of mortgage mentioned heretofore; that said properties were acquired from suppliers other than DAMCO and CONNELL;
that even granting that DAMCO and CONNELL were the real suppliers, the rescission of the sales to DALCO could not
prejudice the mortgage lien in favor of plaintiffs; that considering the foregoing, the proceeds obtained from the sale of the
"after acquired properties" as well as those obtained from the sale of the "undebated properties" in the total sum of
P175,000.00 should have been awarded exclusively to plaintiffs by reason of the mortgage lien they had thereon; that
damages should have been awarded to plaintiffs against defendants, all of them being guilty of an attempt to defraud the
former when they sought to rescind the sales already mentioned for the purpose of defeating their mortgage lien, and
finally, that defendants should have been made to bear all the expenses of the receivership, costs and attorney's fees.
On the other hand, defendants-appellants contend that the trial court erred: firstly, in not holding that plaintiffs had no
cause of action against them because the promissory note sued upon was not yet due when the action to foreclose the
mortgages was commenced; secondly, in not holding that the mortgages aforesaid were null and void as regards the
"after acquired properties" of DALCO because they were not registered in accordance with the Chattel Mortgage Law, the
court erring, as a consequence, in holding that said properties were subject to the mortgage lien in favor of plaintiffs;
thirdly, in not holding that the provision of the fourth paragraph of each of said mortgages did not automatically make
subject to such mortgages the "after acquired properties", the only meaning thereof being that the mortgagor was willing
to constitute a lien over such properties; fourthly, in not ruling that said stipulation was void as against DAMCO and
CONNELL and in not awarding the proceeds obtained from the sale of the "after acquired properties" to the latter
exclusively; fifthly, in appointing a Receiver and in holding that the damages suffered by DAMCO and CONNELL by
reason of the depreciation or loss in value of the "after acquired properties" placed under receivership was damnum
absque injuria and, consequently, in not awarding, to said parties the corresponding damages claimed in their
counterclaim; lastly, in sentencing DALCO and DAMCO to pay attorney's fees and in requiring DAMCO and CONNELL to
pay the costs of the Receivership, instead of sentencing plaintiffs to pay attorney's fees.
Plaintiffs' brief as appellants submit six assignments of error, while that of defendants also as appellants submit a total of
seventeen. However, the multifarious issues thus before Us may be resolved, directly or indirectly, by deciding the
following issues:
Firstly, are the so-called "after acquired properties" covered by and subject to the deeds of mortgage subject of
foreclosure?; secondly, assuming that they are subject thereto, are the mortgages valid and binding on the properties
aforesaid inspite of the fact that they were not registered in accordance with the provisions of the Chattel Mortgage Law?;
thirdly, assuming again that the mortgages are valid and binding upon the "after acquired properties", what is the effect
thereon, if any, of the rescission of sales entered into, on the one hand, between DAMCO and DALCO, and between
DALCO and CONNELL, on the other?; and lastly, was the action to foreclose the mortgages premature?
A. Under the fourth paragraph of both deeds of mortgage, it is crystal clear that all property of every nature and
description taken in exchange or replacement, as well as all buildings, machineries, fixtures, tools, equipments, and other
property that the mortgagor may acquire, construct, install, attach; or use in, to upon, or in connection with the premises
that is, its lumber concession "shall immediately be and become subject to the lien" of both mortgages in the same
manner and to the same extent as if already included therein at the time of their execution. As the language thus used
leaves no room for doubt as to the intention of the parties, We see no useful purpose in discussing the matter extensively.
Suffice it to say that the stipulation referred to is common, and We might say logical, in all cases where the properties
given as collateral are perishable or subject to inevitable wear and tear or were intended to be sold, or to be used thus
becoming subject to the inevitable wear and tear but with the understanding express or implied that they shall be
replaced with others to be thereafter acquired by the mortgagor. Such stipulation is neither unlawful nor immoral, its
obvious purpose being to maintain, to the extent allowed by circumstances, the original value of the properties given as
security. Indeed, if such properties were of the nature already referred to, it would be poor judgment on the part of the
creditor who does not see to it that a similar provision is included in the contract.
B. But defendants contend that, granting without admitting, that the deeds of mortgage in question cover the "after
acquired properties" of DALCO, the same are void and ineffectual because they were not registered in accordance with
the Chattel Mortgage Law. In support of this and of the proposition that, even if said mortgages were valid, they should not
prejudice them, the defendants argue (1) that the deeds do not describe the mortgaged chattels specifically, nor were they
registered in accordance with the Chattel Mortgage Law; (2) that the stipulation contained in the fourth paragraph thereof
constitutes "mere executory agreements to give a lien" over the "after acquired properties" upon their acquisition; and (3)
that any mortgage stipulation concerning "after acquired properties" should not prejudice creditors and other third persons
such as DAMCO and CONNELL.

The stipulation under consideration strongly belies defendants contention. As adverted to hereinbefore, it states that all
property of every nature, building, machinery etc. taken in exchange or replacement by the mortgagor "shall immediately
be and become subject to the lien of this mortgage in the same manner and to the same extent as if now included
therein". No clearer language could have been chosen.
Conceding, on the other hand, that it is the law in this jurisdiction that, to affect third persons, a chattel mortgage must be
registered and must describe the mortgaged chattels or personal properties sufficiently to enable the parties and any
other person to identify them, We say that such law does not apply to this case.
As the mortgages in question were executed on July 13, 1950 with the old Civil Code still in force, there can be no doubt
that the provisions of said code must govern their interpretation and the question of their validity. It happens however, that
Articles 334 and 1877 of the old Civil Code are substantially reproduced in Articles 415 and 2127, respectively, of the new
Civil Code. It is, therefore, immaterial in this case whether we take the former or the latter as guide in deciding the point
under consideration.
Article 415 does not define real property but enumerates what are considered as such, among them being machinery,
receptacles, instruments or replacements intended by owner of the tenement for an industry or works which may be
carried on in a building or on a piece of land, and shall tend directly to meet the needs of the said industry or works.
On the strength of the above-quoted legal provisions, the lower court held that inasmuch as "the chattels were placed in
the real properties mortgaged to plaintiffs, they came within the operation of Art. 415, paragraph 5 and Art. 2127 of the
New Civil Code".
We find the above ruling in agreement with our decisions on the subject:
(1) In Berkenkotter vs. Cu Unjieng, 61 Phil. 663, We held that Article 334, paragraph 5 of the Civil Code (old) gives the
character of real property to machinery, liquid containers, instruments or replacements intended 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 of such trade or industry.
(2) In Cu Unjieng e Hijos vs. Mabalacat Sugar Co., 58 Phil. 439, We held that a mortgage constituted on a sugar central
includes not only the land on which it is built but also the buildings, machinery and accessories installed at the time the
mortgage was constituted as well as the buildings, machinery and accessories belonging to the mortgagor, installed after
the constitution thereof .
It is not disputed in the case at bar that the "after acquired properties" were purchased by DALCO in connection with, and
for use in the development of its lumber concession and that they were purchased in addition to, or in replacement of
those already existing in the premises on July 13, 1950. In Law, therefore, they must be deemed to have
been immobilized, with the result that the real estate mortgages involved herein which were registered as such did
not have to be registered a second time as chattel mortgages in order to bind the "after acquired properties" and affect
third parties.
But defendants, invoking the case of Davao Sawmill Company vs. Castillo, 61 Phil. 709, claim that the "after acquired
properties" did not become immobilized because DALCO did not own the whole area of its lumber concession all over
which said properties were scattered.
The facts in the Davao Sawmill case, however, are not on all fours with the ones obtaining in the present. In the former,
the Davao Sawmill Company, Inc., had repeatedly treated the machinery therein involved as personal property by
executing chattel mortgages thereon in favor of third parties, while in the present case the parties had treated the "after
acquired properties" as real properties by expressly and unequivocally agreeing that they shall automatically become
subject to the lien of the real estate mortgages executed by them. In the Davao Sawmill decision it was, in fact, stated that
"the characterization of the property as chattels by the appellant is indicative of intention and impresses upon the property
the character determined by the parties" (61 Phil. 112, emphasis supplied). In the present case, the characterization of the
"after acquired properties" as real property was made not only by one but by both interested parties. There is, therefore,
more reason to hold that such consensus impresses upon the properties the character determined by the parties who
must now be held in estoppel to question it.
Moreover, quoted in the Davao Sawmill case was that of Valdez vs. Central Altagracia, Inc. (225 U.S. 58) where it was
held that while under the general law of Puerto Rico, machinery placed on property by a tenant does not become
immobilized, yet, when the tenant places it there pursuant to contract that it shall belong to the owner, it then becomes

immobilized as to that tenant and even as against his assignees and creditors who had sufficient notice of such
stipulation. In the case at bar it is not disputed that DALCO purchased the "after acquired properties" to be placed on, and
be used in the development of its lumber concession, and agreed further that the same shall become immediately subject
to the lien constituted by the questioned mortgages. There is also abundant evidence in the record that DAMCO and
CONNELL had full notice of such stipulation and had never thought of disputed validity until the present case was filed.
Consequently all of them must be deemed barred from denying that the properties in question had become immobilized.
What We have said heretofore sufficiently disposes all the arguments adduced by defendants in support their contention
that the mortgages under foreclosure are void, and, that, even if valid, are ineffectual as against DAMCO and CONNELL.
Now to the question of whether or not DAMCO CONNELL have rights over the "after acquired properties" superior to the
mortgage lien constituted thereon in favor of plaintiffs. It is defendants' contention that in relation to said properties they
are "unpaid sellers"; that as such they had not only a superior lien on the "after acquired properties" but also the right to
rescind the sales thereof to DALCO.
This contention it is obvious would have validity only if it were true that DAMCO and CONNELL were the suppliers
or vendors of the "after acquired properties". According to the record, plaintiffs did not know their exact identity and
description prior to the filing of the case bar because DALCO, in violation of its obligation under the mortgages, had failed
and refused theretofore to submit a complete list thereof. In the course of the proceedings, however, when defendants
moved to dissolve the order of receivership and the writ of preliminary injunction issued by the lower court, they attached
to their motion the lists marked as Exhibits 1, 2 and 3 describing the properties aforesaid. Later on, the parties agreed to
consider said lists as identifying and describing the "after acquire properties," and engaged the services of auditors to
examine the books of DALCO so as to bring out the details thereof. The report of the auditors and its annexes (Exhibits V,
V-1 V4) show that neither DAMCO nor CONNELL had supplied any of the goods of which they respective claimed to
be the unpaid seller; that all items were supplied by different parties, neither of whom appeared to be DAMCO or
CONNELL that, in fact, CONNELL collected a 5% service charge on the net value of all items it claims to have sold to
DALCO and which, in truth, it had purchased for DALCO as the latter's general agent; that CONNELL had to issue its own
invoices in addition to those o f the real suppliers in order to collect and justify such service charge.
Taking into account the above circumstances together with the fact that DAMCO was a stockholder and CONNELL was
not only a stockholder but the general agent of DALCO, their claim to be the suppliers of the "after acquired required
properties" would seem to be preposterous. The most that can be claimed on the basis of the evidence is that DAMCO
and CONNELL probably financed some of the purchases. But if DALCO still owes them any amount in this connection, it
is clear that, as financiers, they can not claim any right over the "after acquired properties" superior to the lien constituted
thereon by virtue of the deeds of mortgage under foreclosure. Indeed, the execution of the rescission of sales mentioned
heretofore appears to be but a desperate attempt to better or improve DAMCO and CONNELL's position by enabling them
to assume the role of "unpaid suppliers" and thus claim a vendor's lien over the "after acquired properties". The attempt,
of course, is utterly ineffectual, not only because they are not the "unpaid sellers" they claim to be but also because there
is abundant evidence in the record showing that both DAMCO and CONNELL had known and admitted from the
beginning that the "after acquired properties" of DALCO were meant to be included in the first and second mortgages
under foreclosure.
The claim that Belden, of ATLANTIC, had given his consent to the rescission, expressly or otherwise, is of no
consequence and does not make the rescission valid and legally effective. It must be stated clearly, however, in justice to
Belden, that, as a member of the Board of Directors of DALCO, he opposed the resolution of December 15, 1952 passed
by said Board and the subsequent rescission of the sales.
Finally, defendants claim that the action to foreclose the mortgages filed on February 12, 1953 was premature because
the promissory note sued upon did not fall due until April 1 of the same year, concluding from this that, when the action
was commenced, the plaintiffs had no cause of action. Upon this question the lower court says the following in the
appealed judgment;
The other is the defense of prematurity of the causes of action in that plaintiffs, as a matter of grace, conceded an
extension of time to pay up to 1 April, 1953 while the action was filed on 12 February, 1953, but, as to this, the
Court taking it that there is absolutely no debate that Dahican Lumber Co., was insolvent as of the date of the
filing of the complaint, it should follow that the debtor thereby lost the benefit to the period.
x x x unless he gives a guaranty or security for the debt . . . (Art. 1198, New Civil Code);

and as the guaranty was plainly inadequate since the claim of plaintiffs reached in the aggregate, P1,200,000
excluding interest while the aggregate price of the "after-acquired" chattels claimed by Connell under the
rescission contracts was P1,614,675.94, Exh. 1, Exh. V, report of auditors, and as a matter of fact, almost all the
properties were sold afterwards for only P175,000.00, page 47, Vol. IV, and the Court understanding that when
the law permits the debtor to enjoy the benefits of the period notwithstanding that he is insolvent by his giving a
guaranty for the debt, that must mean a new and efficient guaranty, must concede that the causes of action for
collection of the notes were not premature.
Very little need be added to the above. Defendants, however, contend that the lower court had no basis for finding that,
when the action was commenced, DALCO was insolvent for purposes related to Article 1198, paragraph 1 of the Civil
Code. We find, however, that the finding of the trial court is sufficiently supported by the evidence particularly the
resolution marked as Exhibit K, which shows that on December 16, 1952 in the words of the Chairman of the Board
DALCO was "without funds, neither does it expect to have any funds in the foreseeable future." (p. 64, record on appeal).
The remaining issues, namely, whether or not the proceeds obtained from the sale of the "after acquired properties"
should have been awarded exclusively to the plaintiffs or to DAMCO and CONNELL, and if in law they should be
distributed among said parties, whether or not the distribution should be pro-rata or otherwise; whether or not plaintiffs are
entitled to damages; and, lastly, whether or not the expenses incidental to the Receivership should be borne by all the
parties on a pro-rata basis or exclusively by one or some of them are of a secondary nature as they are already impliedly
resolved by what has been said heretofore.
As regard the proceeds obtained from the sale of the of after acquired properties" and the "undebated properties", it is
clear, in view of our opinion sustaining the validity of the mortgages in relation thereto, that said proceeds should be
awarded exclusively to the plaintiffs in payment of the money obligations secured by the mortgages under foreclosure.
On the question of plaintiffs' right to recover damages from the defendants, the law (Articles 1313 and 1314 of the New
Civil Code) provides that creditors are protected in cases of contracts intended to defraud them; and that any third person
who induces another to violate his contract shall be liable for damages to the other contracting party. Similar liability is
demandable under Arts. 20 and 21 which may be given retroactive effect (Arts. 225253) or under Arts. 1902 and
2176 of the Old Civil Code.
The facts of this case, as stated heretofore, clearly show that DALCO and DAMCO, after failing to pay the fifth promissory
note upon its maturity, conspired jointly with CONNELL to violate the provisions of the fourth paragraph of the mortgages
under foreclosure by attempting to defeat plaintiffs' mortgage lien on the "after acquired properties". As a result, the
plaintiffs had to go to court to protect their rights thus jeopardized. Defendants' liability for damages is therefore clear.
However, the measure of the damages suffered by the plaintiffs is not what the latter claim, namely, the difference
between the alleged total obligation secured by the mortgages amounting to around P1,200,000.00, plus the stipulated
interest and attorney's fees, on the one hand, and the proceeds obtained from the sale of "after acquired properties", and
of those that were not claimed neither by DAMCO nor CONNELL, on the other. Considering that the sale of the real
properties subject to the mortgages under foreclosure has not been effected, and considering further the lack of evidence
showing that the true value of all the properties already sold was not realized because their sale was under stress, We
feel that We do not have before Us the true elements or factors that should determine the amount of damages that
plaintiffs are entitled recover from defendants. It is, however, our considered opinion that, upon the facts established, all
the expenses of the Receivership, which was deemed necessary to safeguard the rights of the plaintiffs, should be borne
by the defendants, jointly and severally, in the same manner that all of them should pay to the plaintiffs, jointly a severally,
attorney's fees awarded in the appealed judgment.
In consonance with the portion of this decision concerning the damages that the plaintiffs are entitled to recover from the
defendants, the record of this case shall be remanded below for the corresponding proceedings.
Modified as above indicated, the appealed judgment is affirmed in all other respects. With costs.

11. 133 SCRA 800

JOSE BURGOS, SR., JOSE BURGOS, JR., BAYANI SORIANO and J. BURGOS MEDIA SERVICES, INC., vs. THE
CHIEF OF STAFF, ARMED FORCES OF THE PHILIPPINES, THE CHIEF, PHILIPPINE CONSTABULARY, THE CHIEF
LEGAL OFFICER, PRESIDENTIAL SECURITY COMMAND, THE JUDGE ADVOCATE GENERAL, ET AL., (G.R. No.
L-64261, December 26, 1984)
Assailed in this petition for certiorari prohibition and mandamus with preliminary mandatory and prohibitory injunction is
the validity of two [2] search warrants issued on December 7, 1982 by respondent Judge Ernani Cruz-Pano, Executive
Judge of the then Court of First Instance of Rizal [Quezon City], under which the premises known as No. 19, Road 3,
Project 6, Quezon City, and 784 Units C & D, RMS Building, Quezon Avenue, Quezon City, business addresses of the
"Metropolitan Mail" and "We Forum" newspapers, respectively, were searched, and 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 further pray that a writ of preliminary mandatory and prohibitory injunction be issued for the return of the seized
articles, and that respondents, "particularly the Chief Legal Officer, Presidential Security Command, the Judge Advocate
General, AFP, the City Fiscal of Quezon City, their representatives, assistants, subalterns, subordinates, substitute or
successors" be enjoined from using the articles thus seized as evidence against petitioner Jose Burgos, Jr. and the other
accused in Criminal Case No. Q- 022782 of the Regional Trial Court of Quezon City, entitled People v. Jose Burgos,
Jr. et al. 1
In our Resolution dated June 21, 1983, respondents were required to answer the petition. The plea for preliminary
mandatory and prohibitory injunction was set for hearing on June 28, 1983, later reset to July 7, 1983, on motion of the
Solicitor General in behalf of respondents.
At the hearing on July 7, 1983, the Solicitor General, while opposing petitioners' prayer for a writ of preliminary mandatory
injunction, manifested that respondents "will not use the aforementioned articles as evidence in the aforementioned case
until final resolution of the legality of the seizure of the aforementioned articles. ..." 2 With this manifestation, the prayer for
preliminary prohibitory injunction was rendered moot and academic.
Respondents would have this Court dismiss the petition on the ground that petitioners had come to this Court without
having previously sought the quashal of the search warrants before respondent judge. Indeed, petitioners, before
impugning the validity of the warrants before this Court, should have filed a motion to quash said warrants in the court that
issued them. 3 But this procedural flaw notwithstanding, we take cognizance of this petition in view of the seriousness and
urgency of the constitutional issues 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. In the words of the revered Mr. Justice
Abad Santos in the case of C. Vda. de Ordoveza v. Raymundo, 4 "it is always in the power of the court [Supreme Court] to
suspend its rules or to except a particular case from its operation, whenever the purposes of justice require it...".
Respondents likewise urge dismissal of the petition on ground of laches. Considerable stress is laid on the fact that while
said search warrants were issued on December 7, 1982, the instant petition impugning the same was filed only on June
16, 1983 or after the lapse of a period of more than six [6] months.
Laches is 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. 5
Petitioners, in their Consolidated Reply, explained the reason for the delay in the filing of the petition thus:
Respondents should not find fault, as they now do [p. 1, Answer, p. 3, Manifestation] with the fact that the
Petition was filed on June 16, 1983, more than half a year after the petitioners' premises had been raided.
The climate of the times has given petitioners no other choice. If they had waited this long to bring their
case to court, it was because they tried at first to exhaust other remedies. The events of the past eleven
fill years had taught them that everything in this country, from release of public funds to release of
detained persons from custody, has become a matter of executive benevolence or largesse

Hence, as soon as they could, petitioners, upon suggestion of persons close to the President, like Fiscal
Flaminiano, sent a letter to President Marcos, through counsel Antonio Coronet asking the return at least
of the printing equipment and vehicles. And after such a letter had been sent, through Col. Balbino V.
Diego, Chief Intelligence and Legal Officer of the Presidential Security Command, they were further
encouraged to hope that the latter would yield the desired results.
After waiting in vain for five [5] months, petitioners finally decided to come to Court. [pp. 123-124, Rollo]
Although the reason given by petitioners may not be flattering to our judicial system, We find no ground to punish or
chastise them for an error in judgment. On the contrary, the extrajudicial efforts exerted by petitioners quite evidently
negate the presumption that they had abandoned their right to the possession of the seized property, thereby refuting the
charge of laches against them.
Respondents also submit the theory that since petitioner Jose Burgos, Jr. had used and marked as evidence some of the
seized documents in Criminal Case No. Q- 022872, he is now estopped from challenging the validity of the search
warrants. We do not follow the logic of respondents. These documents lawfully belong to petitioner Jose Burgos, Jr. and
he can do whatever he pleases with them, within legal bounds. The fact that he has used them as evidence does not and
cannot in any way affect the validity or invalidity of the search warrants assailed in this petition.
Several and diverse reasons have been advanced by petitioners to nullify the search warrants in question.
1. Petitioners fault respondent judge for his alleged failure 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 . 6 This objection, however, 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. Search Warrants No. 20-82[a] and No. 20- 82[b] were used to search two distinct places: No. 19, Road 3, Project 6,
Quezon City and 784 Units C & D, RMS Building, Quezon Avenue, Quezon City, respectively. Objection is interposed to
the execution of Search Warrant No. 20-82[b] at the latter address on the ground that the two search warrants pinpointed
only one place where petitioner Jose Burgos, Jr. was allegedly keeping and concealing the articles listed therein, i.e., No.
19, Road 3, Project 6, Quezon City. This assertion is based on that portion of Search Warrant No. 20- 82[b] which states:
Which have been used, and are being used as instruments and means of committing the crime of
subversion penalized under P.D. 885 as amended and he is keeping and concealing the same at 19
Road 3, Project 6, Quezon City.
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. Besides, the addresses of the places sought to
be searched were specifically set forth in the application, and since it was Col. Abadilla himself who headed the team
which executed the search warrants, the ambiguity that might have arisen by reason of the typographical error is more
apparent than real. The fact is that the place for which Search Warrant No. 20- 82[b] was applied for was 728 Units C & D,
RMS Building, Quezon Avenue, Quezon City, which address appeared in the opening paragraph of the said
warrant. 7 Obviously this is the same place that respondent judge had in mind when he issued Warrant No. 20-82 [b].
In the determination of whether a search warrant describes the premises to be searched with sufficient particularity, it has
been held "that the executing officer's prior knowledge as to the place intended in the warrant is relevant. This would
seem to be especially true where the executing officer is the affiant on whose affidavit the warrant had issued, and when
he knows that the judge who issued the warrant intended the building described in the affidavit, And it has also been said
that the executing officer may look to the affidavit in the official court file to resolve an ambiguity in the warrant as to the
place to be searched." 8
3. Another ground relied upon to annul the search warrants is the fact that although the warrants were directed against
Jose Burgos, Jr. alone, articles b belonging to his co-petitioners Jose Burgos, Sr., Bayani Soriano and the J. Burgos
Media Services, Inc. were seized.
Section 2, Rule 126 of the Rules of Court, enumerates the personal properties that may be seized under a search
warrant, to wit:

Sec. 2. Personal Property to be seized. A search warrant may be issued for the search and seizure of
the following personal property:
[a] Property subject of the offense;
[b] Property stolen or embezzled and other proceeds or fruits of the offense; and
[c] Property used or intended to be used as the means of committing an offense.
The above rule 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. In fact, under subsection [b] of the above-quoted Section 2, one
of the properties that may be seized is stolen property. Necessarily, stolen property must be owned by one other than the
person in whose possession it may be at the time of the search and seizure. Ownership, therefore, is of no consequence,
and it is sufficient that the person against whom the warrant is directed has control or possession of the property sought to
be seized, as petitioner Jose Burgos, Jr. was alleged to have in relation to the articles and property seized under the
warrants.
4. Neither is there merit in petitioners' assertion that real properties were seized under the disputed warrants. Under
Article 415[5] of the Civil Code of the Philippines, "machinery, receptables, 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 Davao Sawmill Co. v.
Castillo 9 where this legal provision was invoked, this Court 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 a 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 remain movable property
susceptible to seizure under a search warrant.
5. The questioned search warrants were issued by respondent judge upon application of Col. Rolando N. Abadilla
Intelligence Officer of the P.C. Metrocom. 10 The application was accompanied by the Joint Affidavit of Alejandro M.
Gutierrez and Pedro U. Tango, 11 members of the Metrocom Intelligence and Security Group under Col. Abadilla which
conducted a surveillance of the premises prior to the filing of the application for the search warrants on December 7,
1982.
It is contended by petitioners, however, that the abovementioned documents 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.
We find petitioners' thesis impressed with merit. Probable cause for a search is defined as such facts and circumstances
which would lead a reasonably discreet and prudent man to believe that an offense has been committed and that the
objects sought in connection with the offense are in the place sought to be searched. And when the search warrant
applied for is directed against a newspaper publisher or editor in connection with the publication of subversive materials,
as in the case at bar, the application and/or its supporting affidavits must contain a specification, stating with particularity
the alleged subversive material he has published or is intending to publish. Mere generalization will not suffice. Thus, the
broad statement in Col. Abadilla's application that petitioner "is in possession or has in his control printing equipment and
other paraphernalia, news publications and other documents which were used and are all continuously being used as a
means of committing the offense of subversion punishable under Presidential Decree 885, as amended ..." 12 is a mere
conclusion of law and does not satisfy the requirements of probable cause. Bereft 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.
Equally insufficient as basis for the determination of probable cause is the statement contained in the joint affidavit of
Alejandro M. Gutierrez and Pedro U. Tango, "that the evidence gathered and collated by our unit clearly shows that the
premises above- mentioned and the articles and things above-described were used and are continuously being used for

subversive activities in conspiracy with, and to promote the objective of, illegal organizations such as the Light-a-Fire
Movement, Movement for Free Philippines, and April 6 Movement." 13
In mandating that "no warrant shall issue except upon probable cause to be determined by the judge, ... after examination
under oath or affirmation of the complainant and the witnesses he may produce; 14 the Constitution requires no less than
personal knowledge by the complainant or his witnesses of the facts upon which the issuance of a search warrant may be
justified. In Alvarez v. Court of First Instance, 15 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." As couched, the quoted averment in said joint affidavit filed before respondent judge hardly meets the
test of sufficiency established by this Court in Alvarez case.
Another factor which makes the search warrants under consideration constitutionally objectionable is that they are in the
nature of general warrants. The search warrants describe the articles sought to be seized in this wise:
1] All printing equipment, paraphernalia, paper, ink, photo (equipment, typewriters, cabinets, tables,
communications/recording equipment, tape recorders, dictaphone and the like used and/or connected in
the printing of the "WE FORUM" newspaper and any and all documents communication, letters and
facsimile of prints related to the "WE FORUM" newspaper.
2] Subversive documents, pamphlets, leaflets, books, and other publication to promote the objectives and
piurposes of the subversive organization known as Movement for Free Philippines, Light-a-Fire
Movement and April 6 Movement; and,
3] Motor vehicles used in the distribution/circulation of the "WE FORUM" and other subversive materials
and propaganda, more particularly,
1] Toyota-Corolla, colored yellow with Plate No. NKA 892;
2] DATSUN pick-up colored white with Plate No. NKV 969
3] A delivery truck with Plate No. NBS 524;
4] TOYOTA-TAMARAW, colored white with Plate No. PBP 665; and,
5] TOYOTA Hi-Lux, pick-up truck with Plate No. NGV 427 with marking "Bagong Silang."
In Stanford v. State of Texas 16 the search warrant which authorized the search for "books, records, pamphlets, cards,
receipts, lists, memoranda, pictures, recordings and other written instruments concerning the Communist Party in Texas,"
was declared void by the U.S. Supreme Court for being too general. In like manner, directions to "seize any evidence in
connectionwith the violation of SDC 13-3703 or otherwise" have been held too general, and that portion of a search
warrant which authorized the seizure of any "paraphernalia which could be used to violate Sec. 54-197 of the Connecticut
General Statutes [the statute dealing with the crime of conspiracy]" was held to be a general warrant, and therefore
invalid. 17 The description of the articles sought to be seized under the search warrants in question cannot be
characterized differently.
In the Stanford case, the U.S. Supreme Courts calls to mind a notable chapter in English history: the era of disaccord
between the Tudor Government and the English Press, when "Officers of the Crown were given roving commissions to
search where they pleased in order to suppress and destroy the literature of dissent both Catholic and Puritan Reference
herein to such historical episode would not be relevant for it is not the policy of our government to suppress any
newspaper or publication that speaks with "the voice of non-conformity" but poses no clear and imminent danger to state
security.
As heretofore stated, the premises searched were the business and printing offices of the "Metropolitan Mail" and the "We
Forum newspapers. As a consequence of the search and seizure, these premises were padlocked and sealed, with the
further result that the printing and publication of said newspapers were discontinued.
Such closure is in the nature of previous restraint or censorship abhorrent to the freedom of the press guaranteed under
the fundamental law, 18 and constitutes a virtual denial of petitioners' freedom to express themselves in print. This state of

being is patently anathematic to a democratic framework where a free, alert and even militant press is essential for the
political enlightenment and growth of the citizenry.
Respondents would justify the continued sealing of the printing machines on the ground that they have been sequestered
under Section 8 of Presidential Decree No. 885, as amended, which authorizes "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." 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, in the December 10, 1982 issue of the Daily Express, it was reported that no less than President Marcos himself
denied the request of the military authorities to sequester the property seized from petitioners on December 7, 1982.
Thus:
The President denied a request flied by government prosecutors for sequestration of the WE FORUM
newspaper and its printing presses, according to Information Minister Gregorio S. Cendana.
On the basis of court orders, government agents went to the We Forum offices in Quezon City and took a
detailed inventory of the equipment and all materials in the premises.
Cendaa said that because of the denial the newspaper and its equipment remain at the disposal of the
owners, subject to the discretion of the court. 19
That the property seized on December 7, 1982 had not been sequestered is further confirmed by the reply of then Foreign
Minister Carlos P. Romulo to the letter dated February 10, 1983 of U.S. Congressman Tony P. Hall addressed to
President Marcos, expressing alarm over the "WE FORUM " case. 20 In this reply dated February 11, 1983, Minister
Romulo stated:
2. Contrary to reports, President Marcos turned down the recommendation of our authorities to close the
paper's printing facilities and confiscate the equipment and materials it uses. 21
IN VIEW OF THE FOREGOING, Search Warrants Nos. 20-82[a] and 20-82[b] issued by respondent judge on December
7, 1982 are hereby declared null and void and are accordingly set aside. The prayer for a writ of mandatory injunction for
the return of the seized articles is hereby granted and all articles seized thereunder are hereby ordered released to
petitioners. No costs.
SO ORDERED.

12. 338 SCRA 499

SERG'S PRODUCTS, INC., and SERGIO T. GOQUIOLAY vs. PCI LEASING AND FINANCE, INC., (G.R. No. 137705,
August 22, 2000)
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 obtained by
the other contracting party.
The Case
Before us is a Petition for Review on Certiorari assailing the January 6, 1999 Decision 1 of the Court of Appeals (CA)2 in
CA-GR SP No. 47332 and its February 26, 1999 Resolution3 denying reconsideration. The decretal portion of the CA
Decision reads as follows:
"WHEREFORE, premises considered, the assailed Order dated February 18, 1998 and Resolution dated March 31, 1998
in Civil Case No. Q-98-33500 are hereby AFFIRMED. The writ of preliminary injunction issued on June 15, 1998 is
hereby LIFTED."4
In its February 18, 1998 Order,5 the Regional Trial Court (RTC) of Quezon City (Branch 218) 6 issued a Writ of
Seizure.7 The March 18, 1998 Resolution8 denied petitioners Motion for Special Protective Order, praying that the deputy
sheriff be enjoined "from seizing immobilized or other real properties in (petitioners) factory in Cainta, Rizal and to return
to their original place whatever immobilized machineries or equipments he may have removed."9
The Facts
The undisputed facts are summarized by the Court of Appeals as follows: 10
"On February 13, 1998, respondent PCI Leasing and Finance, Inc. ("PCI Leasing" for short) filed with the RTC-QC a
complaint for [a] sum of money (Annex E), with an application for a writ of replevin docketed as Civil Case No. Q-9833500.
"On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge issued a writ of replevin (Annex B)
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.
"On March 25, 1998, petitioners filed a motion for special protective order (Annex C), 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 (Annex F), on the ground that the properties [were] still personal and therefore
still subject to seizure and a writ of replevin.
"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 in which the alleged agreement [were] embodied [were] totally sham and
farcical.
"On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take possession of the remaining properties.
He was able to take two more, but was prevented by the workers from taking the rest.
"On April 7, 1998, they went to [the CA] via an original action for certiorari."
Ruling of the Court of Appeals

Citing the Agreement of the parties, the appellate court held that the subject machines were personal property, and that
they had only been leased, not owned, by petitioners. It also ruled that the "words of the contract are clear and leave no
doubt upon the true intention of the contracting parties." Observing that Petitioner Goquiolay was an experienced
businessman who was "not unfamiliar with the ways of the trade," it ruled that he "should have realized the import of the
document he signed." The CA further held:
"Furthermore, to accord merit to this petition would be to preempt the trial court in ruling upon the case below, since the
merits of the whole matter are laid down before us via a petition whose sole purpose is to inquire upon the existence of a
grave abuse of discretion on the part of the [RTC] in issuing the assailed Order and Resolution. The issues raised herein
are proper subjects of a full-blown trial, necessitating presentation of evidence by both parties. The contract is being
enforced by one, and [its] validity is attacked by the other a matter x x x which respondent court is in the best position to
determine."
Hence, this Petition.11
The Issues
In their Memorandum, petitioners submit the following issues for our consideration:
"A. Whether or not the machineries purchased and imported by SERGS became real property by virtue of immobilization.
B. Whether or not the contract between the parties is a loan or a lease."12
In the main, the Court will resolve whether the said machines are personal, not immovable, property which may be a
proper subject of a writ of replevin. As a preliminary matter, the Court will also address briefly the procedural points raised
by respondent.
The Courts Ruling
The Petition is not meritorious.
Preliminary Matter:Procedural Questions
Respondent contends that the Petition failed to indicate expressly whether it was being filed under Rule 45 or Rule 65 of
the Rules of Court. It further alleges that the Petition erroneously impleaded Judge Hilario Laqui as respondent.
There is no question that the present recourse is under Rule 45. This conclusion finds support in the very title of the
Petition, which is "Petition for Review on Certiorari."13
While Judge Laqui should not have been impleaded as a respondent,14 substantial justice requires that such lapse by
itself should not warrant the dismissal of the present Petition. In this light, the Court deems it proper to remove, motu
proprio, the name of Judge Laqui from the caption of the present case.
Main Issue: Nature of the Subject Machinery
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. Serious policy considerations, they argue, militate against a contrary
characterization.
Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property
only.15 Section 3 thereof reads:
"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 alleged to be wrongfully detained and requiring the sheriff
forthwith to take such property into his custody."
On the other hand, Article 415 of the Civil Code enumerates immovable or real property as follows:

"ART. 415. The following are immovable property:

xxx

xxx

xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works
which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry
or works;
xxx

xxx

x x x"

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."16 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.17
Be that as it may, we disagree with the submission of the petitioners that the said machines are not proper subjects of the
Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a real property be considered as personal. 18After
agreeing to such stipulation, they are consequently estopped from claiming otherwise. Under the principle of estoppel, a
party to a contract is ordinarily precluded from denying the truth of any material fact found therein.
Hence, in Tumalad v. Vicencio,19 the Court upheld the intention of the parties to treat a house as a personal property
because it had been made the subject of a chattel mortgage. The Court ruled:
"x x x. Although there is no specific statement referring to the subject house as personal property, yet by ceding, selling or
transferring a property by way of chattel mortgage defendants-appellants could only have meant to convey the house as
chattel, or at least, intended to treat the same as such, so that they should not now be allowed to make an inconsistent
stand by claiming otherwise."
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile Mills 20 also held that the machinery
used in a factory and essential to the industry, as in the present case, was a proper subject of a writ of replevin because it
was treated as personal property in a contract. Pertinent portions of the Courts ruling are reproduced hereunder:
"x x x. If a house of strong materials, like what was involved in the above Tumalad case, may be considered as personal
property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so agree and no
innocent third party will be prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its
nature and becomes immobilized only by destination or purpose, may not be likewise treated as such. This is really
because one who has so agreed is estopped from denying the existence of the chattel mortgage."
In the present case, the Lease Agreement clearly provides that the machines in question are to be considered as personal
property. Specifically, Section 12.1 of the Agreement reads as follows:21
"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 thereon, or attached in any manner to what is permanent."
Clearly then, petitioners are estopped from denying the characterization of the subject machines as personal property.
Under the circumstances, they are proper subjects of the Writ of Seizure.
It should be stressed, however, that our holding -- that the machines should be deemed personal property pursuant to the
Lease Agreement is good only insofar as the contracting parties are concerned. 22 Hence, while the parties are bound by
the Agreement, third persons acting in good faith are not affected by its stipulation characterizing the subject machinery
as personal.23 In any event, there is no showing that any specific third party would be adversely affected.
Validity of the Lease Agreement

In their Memorandum, petitioners contend that the Agreement is a loan and not a lease. 24 Submitting documents
supposedly showing that they own the subject machines, petitioners also argue in their Petition that the Agreement suffers
from "intrinsic ambiguity which places in serious doubt the intention of the parties and the validity of the lease agreement
itself."25 In their Reply to respondents Comment, they further allege that the Agreement is invalid.26
These arguments are unconvincing. The validity and the nature of the contract are the lis mota of the civil action pending
before the RTC. A resolution of these questions, therefore, is effectively a resolution of the merits of the case. Hence, they
should be threshed out in the trial, not in the proceedings involving the issuance of the Writ of Seizure.
Indeed, in La Tondea Distillers v. CA,27 the Court explained that the policy under Rule 60 was that questions involving
title to the subject property questions which petitioners are now raising -- should be determined in the trial. In that case,
the Court noted that the remedy of defendants under Rule 60 was either to post a counter-bond or to question the
sufficiency of the plaintiffs bond. They were not allowed, however, to invoke the title to the subject property. The Court
ruled:
"In other words, the law does not allow the defendant to file a motion to dissolve or discharge the writ of seizure (or
delivery) on ground of insufficiency of the complaint or of the grounds relied upon therefor, as in proceedings on
preliminary attachment or injunction, and thereby put at issue the matter of the title or right of possession over the specific
chattel being replevied, the policy apparently being that said matter should be ventilated and determined only at the trial
on the merits."28
Besides, these questions require a determination of facts and a presentation of evidence, both of which have no place in a
petition for certiorari in the CA under Rule 65 or in a petition for review in this Court under Rule 45. 29
Reliance on the Lease Agreement
It should be pointed out that the Court in this case may rely on the Lease Agreement, for nothing on record shows that it
has been nullified or annulled. In fact, petitioners assailed it first only in the RTC proceedings, which had ironically been
instituted by respondent. Accordingly, it must be presumed valid and binding as the law between the parties.
Makati Leasing and Finance Corporation30 is also instructive on this point. In that case, the Deed of Chattel Mortgage,
which characterized the subject machinery as personal property, was also assailed because respondent had allegedly
been required "to sign a printed form of chattel mortgage which was in a blank form at the time of signing." The Court
rejected the argument and relied on the Deed, ruling as follows:
"x x x. Moreover, even granting that the charge is true, such fact alone does not render a contract void ab initio, but can
only be a ground for rendering said contract voidable, or annullable pursuant to Article 1390 of the new Civil Code, by a
proper action in court. There is nothing on record to show that the mortgage has been annulled. Neither is it disclosed that
steps were taken to nullify the same. x x x"
Alleged Injustice Committed on the Part of Petitioners
Petitioners contend that "if the Court allows these machineries to be seized, then its workers would be out of work and
thrown into the streets."31 They also allege that the seizure would nullify all efforts to rehabilitate the corporation.
Petitioners arguments do not preclude the implementation of the Writ.1wphi1 As earlier discussed, law and
jurisprudence support its propriety. Verily, the above-mentioned consequences, if they come true, should not be blamed
on this Court, but on the petitioners for failing to avail themselves of the remedy under Section 5 of Rule 60, which allows
the filing of a counter-bond. The provision states:
"SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the applicants bond, or of the surety or
sureties thereon, he cannot immediately require the return of the property, but if he does not so object, he may, at any
time before the delivery of the property to the applicant, require the return thereof, by filing with the court where the action
is pending a bond executed to the applicant, in double the value of the property as stated in the applicants affidavit for the
delivery thereof to the applicant, if such delivery be adjudged, and for the payment of such sum to him as may be
recovered against the adverse party, and by serving a copy bond on the applicant."
WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of Appeals AFFIRMED. Costs against
petitioners. SO ORDERED.

13. 114 SCRA 297

CALTEX (PHILIPPINES) INC., vs. CENTRAL BOARD OF ASSESSMENT APPEALS and CITY ASSESSOR OF
PASAY (G.R. No. L-50466, May 31, 1982)
This case is about the realty tax on machinery and equipment installed by Caltex (Philippines) Inc. in its gas stations
located on leased land.
The machines and equipment consists of underground tanks, elevated tank, elevated water tanks, water tanks, gasoline
pumps, computing pumps, water pumps, car washer, car hoists, truck hoists, air compressors and tireflators. The city
assessor described the said equipment and machinery in this manner:
A gasoline service station is a piece of lot where a building or shed is erected, a water tank if there is any
is placed in one corner of the lot, car hoists are placed in an adjacent shed, an air compressor is attached
in the wall of the shed or at the concrete wall fence.
The controversial underground tank, depository of gasoline or crude oil, is dug deep about six feet more
or less, a few meters away from the shed. This is done to prevent conflagration because gasoline and
other combustible oil are very inflammable.
This underground tank is connected with a steel pipe to the gasoline pump and the gasoline pump is
commonly placed or constructed under the shed. The footing of the pump is a cement pad and this
cement pad is imbedded in the pavement under the shed, and evidence that the gasoline underground
tank is attached and connected to the shed or building through the pipe to the pump and the pump is
attached and affixed to the cement pad and pavement covered by the roof of the building or shed.
The building or shed, the elevated water tank, the car hoist under a separate shed, the air compressor,
the underground gasoline tank, neon lights signboard, concrete fence and pavement and the lot where
they are all placed or erected, all of them used in the pursuance of the gasoline service station business
formed the entire gasoline service-station.
As to whether the subject properties are attached and affixed to the tenement, it is clear they are, for the
tenement we consider in this particular case are (is) the pavement covering the entire lot which was
constructed by the owner of the gasoline station and the improvement which holds all the properties
under question, they are attached and affixed to the pavement and to the improvement.
The pavement covering the entire lot of the gasoline service station, as well as all the improvements,
machines, equipments and apparatus are allowed by Caltex (Philippines) Inc. ...
The underground gasoline tank is attached to the shed by the steel pipe to the pump, so with the water
tank it is connected also by a steel pipe to the pavement, then to the electric motor which electric motor is
placed under the shed. So to say that the gasoline pumps, water pumps and underground tanks are
outside of the service station, and to consider only the building as the service station is grossly erroneous.
(pp. 58-60, Rollo).
The said machines and equipment are loaned by Caltex to gas station operators under an appropriate lease agreement or
receipt. It is stipulated in the lease contract that the operators, upon demand, shall return to Caltex the machines and
equipment in good condition as when received, ordinary wear and tear excepted.
The lessor of the land, where the gas station is located, does not become the owner of the machines and equipment
installed therein. Caltex retains the ownership thereof during the term of the lease.
The city assessor of Pasay City characterized the said items of gas station equipment and machinery as taxable realty.
The realty tax on said equipment amounts to P4,541.10 annually (p. 52, Rollo). The city board of tax appeals ruled that
they are personalty. The assessor appealed to the Central Board of Assessment Appeals.
The Board, which was composed of Secretary of Finance Cesar Virata as chairman, Acting Secretary of Justice Catalino
Macaraig, Jr. and Secretary of Local Government and Community Development Jose Roo, held in its decision of June 3,
1977 that the said machines and equipment are real property within the meaning of sections 3(k) & (m) and 38 of the Real

Property Tax Code, Presidential Decree No. 464, which took effect on June 1, 1974, and that the definitions of real
property and personal property in articles 415 and 416 of the Civil Code are not applicable to this case.
The decision was reiterated by the Board (Minister Vicente Abad Santos took Macaraig's place) in its resolution of
January 12, 1978, denying Caltex's motion for reconsideration, a copy of which was received by its lawyer on April 2,
1979.
On May 2, 1979 Caltex filed this certiorari petition wherein it prayed for the setting aside of the Board's decision and for a
declaration that t he said machines and equipment are personal property not subject to realty tax (p. 16, Rollo).
The Solicitor General's contention that the Court of Tax Appeals has exclusive appellate jurisdiction over this case is not
correct. When Republic act No. 1125 created the Tax Court in 1954, there was as yet no Central Board of Assessment
Appeals. Section 7(3) of that law in providing that the Tax Court had jurisdiction to review by appeal decisions of provincial
or city boards of assessment appeals had in mind the local boards of assessment appeals but not the Central Board of
Assessment Appeals which under the Real Property Tax Code has appellate jurisdiction over decisions of the said local
boards of assessment appeals and is, therefore, in the same category as the Tax Court.
Section 36 of the Real Property Tax Code provides that the decision of the Central Board of Assessment Appeals shall
become final and executory after the lapse of fifteen days from the receipt of its decision by the appellant. Within that
fifteen-day period, a petition for reconsideration may be filed. The Code does not provide for the review of the Board's
decision by this Court.
Consequently, the only remedy available for seeking a review by this Court of the decision of the Central Board of
Assessment Appeals is the special civil action of certiorari, the recourse resorted to herein by Caltex (Philippines), Inc.
The issue is whether the pieces of gas station equipment and machinery already enumerated are subject to realty tax.
This issue has to be resolved primarily under the provisions of the Assessment Law and the Real Property Tax Code.
Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land, buildings, machinery,
and other improvements" not specifically exempted in section 3 thereof. This provision is reproduced with some
modification in the Real Property Tax Code which provides:
SEC. 38. Incidence of Real Property Tax. There shall be levied, assessed and collected in all
provinces, cities and municipalities an annual ad valorem tax on real property, such as land, buildings,
machinery and other improvements affixed or attached to real property not hereinafter specifically
exempted.
The Code contains the following definitions in its section 3:
k) Improvements is a valuable addition made to property or an amelioration in its condition, amounting
to more than mere repairs or replacement of waste, costing labor or capital and intended to enhance its
value, beauty or utility or to adapt it for new or further purposes.
m) Machinery shall embrace machines, mechanical contrivances, instruments, appliances and
apparatus attached to the real estate. It includes the physical facilities available for production, as well as
the installations and appurtenant service facilities, together with all other equipment designed for or
essential to its manufacturing, industrial or agricultural purposes (See sec. 3[f], Assessment Law).
We hold that the said equipment and machinery, as appurtenances to the gas station building or shed owned by Caltex
(as to which it is subject to realty tax) and which fixtures are necessary to the operation of the gas station, for without them
the gas station would be useless, and which have been attached or affixed permanently to the gas station site or
embedded therein, are taxable improvements and machinery within the meaning of the Assessment Law and the Real
Property Tax Code.
Caltex invokes the rule that machinery which is movable in its nature only becomes immobilized when placed in a plant by
the owner of the property or plant but not when so placed by a tenant, a usufructuary, or any person having only a
temporary right, unless such person acted as the agent of the owner (Davao Saw Mill Co. vs. Castillo, 61 Phil 709).

That ruling is an interpretation of paragraph 5 of article 415 of the Civil Code regarding machinery that becomes real
property by destination. In the Davao Saw Mills case the question was whether the machinery mounted on foundations of
cement and installed by the lessee on leased land should be regarded as real property forpurposes of execution of a
judgment against the lessee. The sheriff treated the machinery as personal property. This Court sustained the sheriff's
action. (Compare with Machinery & Engineering Supplies, Inc. vs. Court of Appeals, 96 Phil. 70, where in a replevin case
machinery was treated as realty).
Here, the question is whether the gas station equipment and machinery permanently affixed by Caltex to its gas station
and pavement (which are indubitably taxable realty) should be subject to the realty tax. This question is different from the
issue raised in the Davao Saw Mill case.
Improvements on land are commonly taxed as realty even though for some purposes they might be considered personalty
(84 C.J.S. 181-2, Notes 40 and 41). "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" (Standard Oil Co. of New York vs. Jaramillo,
44 Phil. 630, 633).
This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co., 119 Phil. 328, where
Meralco's steel towers were considered poles within the meaning of paragraph 9 of its franchise which exempts its poles
from taxation. The steel towers were considered personalty because they were attached to square metal frames by
means of 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 tools and equipment in the repair shop of a bus
company which were held to be personal property not subject to realty tax (Mindanao Bus Co. vs. City Assessor, 116 Phil.
501).
The Central Board of Assessment Appeals did not commit a grave abuse of discretion in upholding the city assessor's is
imposition of the realty tax on Caltex's gas station and equipment.
WHEREFORE, the questioned decision and resolution of the Central Board of Assessment Appeals are affirmed. The
petition for certiorari is dismissed for lack of merit. No costs.
SO ORDERED.

14. 119 PHIL 328

BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF QUEZON CITY, vs. MANILA
ELECTRIC COMPANY (G.R. No. L-15334, January 31, 1964)
From the stipulation of facts and evidence adduced during the hearing, the following appear:
On October 20, 1902, the Philippine Commission enacted Act No. 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 No. 44 approved on
March 24, 1903. Respondent Manila Electric Co. (Meralco for short), 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 hydro-electric plant in the province of Laguna to the City of Manila. The
respondent Meralco has constructed 40 of these steel towers within Quezon City, on land belonging to it. A photograph of
one of these steel towers is attached to the petition for review, marked Annex A. Three steel towers were inspected by the
lower court and parties and the following were the descriptions given there of by said court:
The first steel tower is located in South Tatalon, Espaa Extension, Quezon City. The findings were as follows:
the ground around one of the four posts was excavated to a depth of about eight (8) feet, with an opening of
about one (1) meter in diameter, decreased to about a quarter of a meter as it we deeper until it reached the
bottom of the post; at the bottom of the post were two parallel steel bars attached to the leg means of bolts; the
tower proper was attached to the leg three bolts; with two cross metals to prevent mobility; there was no concrete
foundation but there was adobe stone underneath; as the bottom of the excavation was covered with water about
three inches high, it could not be determined with certainty to whether said adobe stone was placed purposely or
not, as the place abounds with this kind of stone; and the tower carried five high voltage wires without cover or
any insulating materials.
The second tower inspected was located in Kamuning Road, K-F, Quezon City, on land owned by the petitioner
approximate more than one kilometer from the first tower. As in the first tower, the ground around one of the four
legs was excavate from seven to eight (8) feet deep and one and a half (1-) meters wide. There being very little
water at the bottom, it was seen that there was no concrete foundation, but there soft adobe beneath. The leg
was likewise provided with two parallel steel bars bolted to a square metal frame also bolted to each corner. Like
the first one, the second tower is made up of metal rods joined together by means of bolts, so that by unscrewing
the bolts, the tower could be dismantled and reassembled.
The third tower examined is located along Kamias Road, Quezon City. As in the first two towers given above, the
ground around the two legs of the third tower was excavated to a depth about two or three inches beyond the
outside level of the steel bar foundation. It was found that there was no concrete foundation. Like the two previous
ones, the bottom arrangement of the legs thereof were found to be resting on soft adobe, which, probably due to
high humidity, looks like mud or clay. It was also found that the square metal frame supporting the legs were not
attached to any material or foundation.
On November 15, 1955, petitioner City Assessor of Quezon City declared the aforesaid steel towers for real property tax
under Tax declaration Nos. 31992 and 15549. After denying respondent's petition to cancel these declarations, an appeal
was taken by respondent to the Board of Assessment Appeals of Quezon City, which required respondent to pay the
amount of P11,651.86 as real property tax on the said steel towers for the years 1952 to 1956. Respondent paid the
amount under protest, and filed a petition for review in the Court of Tax Appeals (CTA for short) which rendered a decision
on December 29, 1958, ordering the cancellation of the said tax declarations and the petitioner City Treasurer of Quezon
City to refund to the respondent the sum of P11,651.86. The motion for reconsideration having been denied, on April 22,
1959, the instant petition for review was filed.
In upholding the cause of respondents, the CTA held that: (1) the steel towers come within the term "poles" which are
declared exempt from taxes under part II paragraph 9 of respondent's franchise; (2) the steel towers are personal
properties and are not subject to real property tax; and (3) the City Treasurer of Quezon City is held responsible for the
refund of the amount paid. These are assigned as errors by the petitioner in the brief.

The tax exemption privilege of the petitioner is quoted hereunder:

PAR 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings, plant (not including poles,
wires, transformers, and insulators), machinery and personal property as other persons are or may be hereafter
required by law to pay ... Said percentage shall be due and payable at the time stated in paragraph nineteen of
Part One hereof, ... and shall be in lieu of all taxes and assessments of whatsoever nature and by whatsoever
authority upon the privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the
grantee from which taxes and assessments the grantee is hereby expressly exempted. (Par. 9, Part Two, Act No.
484 Respondent's Franchise; emphasis supplied.)
The word "pole" means "a long, comparatively slender usually cylindrical piece of wood or timber, as typically the stem of
a small tree stripped of its branches; also by extension, a similar typically cylindrical piece or object of metal or the like".
The term also refers to "an upright standard to the top of which something is affixed or by which something is supported;
as a dovecote set on a pole; telegraph poles; a tent pole; sometimes, specifically a vessel's master (Webster's New
International Dictionary 2nd Ed., p. 1907.) Along the streets, in the City of Manila, may be seen cylindrical metal poles,
cubical concrete poles, and poles of the PLDT Co. which are made of two steel bars joined together by an interlacing
metal rod. They are called "poles" notwithstanding the fact that they are no made of wood. It must be noted from
paragraph 9, above quoted, that the concept of the "poles" for which exemption is granted, is not determined by their
place or location, nor by the character of the electric current it carries, nor the material or form of which it is made, but the
use to which they are dedicated. In accordance with the definitions, pole is not restricted to a long cylindrical piece of
wood or metal, but includes "upright standards to the top of which something is affixed or by which something is
supported. As heretofore described, respondent's steel supports consists of a framework of four steel bars or strips which
are bound by steel cross-arms atop of which are cross-arms supporting five high voltage transmission wires (See Annex
A) and their sole function is to support or carry such wires.
The conclusion of the CTA that the steel supports in question are embraced in the term "poles" is not a novelty. Several
courts of last resort in the United States have called these steel supports "steel towers", and they denominated these
supports or towers, as electric poles. In their decisions the words "towers" and "poles" were used interchangeably, and it
is well understood in that jurisdiction that a transmission tower or pole means the same thing.
In a proceeding to condemn land for the use of electric power wires, in which the law provided that wires shall be
constructed upon suitable poles, this term was construed to mean either wood or metal poles and in view of the land
being subject to overflow, and the necessary carrying of numerous wires and the distance between poles, the statute was
interpreted to include towers or poles. (Stemmons and Dallas Light Co. (Tex) 212 S.W. 222, 224; 32-A Words and
Phrases, p. 365.)
The term "poles" was also used to denominate the steel supports or towers used by an association used to convey its
electric power furnished to subscribers and members, constructed for the purpose of fastening high voltage and
dangerous electric wires alongside public highways. The steel supports or towers were made of iron or other metals
consisting of two pieces running from the ground up some thirty feet high, being wider at the bottom than at the top, the
said two metal pieces being connected with criss-cross iron running from the bottom to the top, constructed like ladders
and loaded with high voltage electricity. In form and structure, they are like the steel towers in question. (Salt River Valley
Users' Ass'n v. Compton, 8 P. 2nd, 249-250.)
The term "poles" was used to denote the steel towers of an electric company engaged in the generation of hydro-electric
power generated from its plant to the Tower of Oxford and City of Waterbury. These steel towers are about 15 feet square
at the base and extended to a height of about 35 feet to a point, and are embedded in the cement foundations sunk in the
earth, the top of which extends above the surface of the soil in the tower of Oxford, and to the towers are attached
insulators, arms, and other equipment capable of carrying wires for the transmission of electric power (Connecticut Light
and Power Co. v. Oxford, 101 Conn. 383, 126 Atl. p. 1).
In a case, the defendant admitted that the structure on which a certain person met his death was built for the purpose of
supporting a transmission wire used for carrying high-tension electric power, but claimed that the steel towers on which it
is carried were so large that their wire took their structure out of the definition of a pole line. It was held that in defining the
word pole, one should not be governed by the wire or material of the support used, but was considering the danger from
any elevated wire carrying electric current, and that regardless of the size or material wire of its individual members, any
continuous series of structures intended and used solely or primarily for the purpose of supporting wires carrying electric
currents is a pole line (Inspiration Consolidation Cooper Co. v. Bryan 252 P. 1016).

It is evident, therefore, that the word "poles", as used in Act No. 484 and incorporated in the petitioner's franchise, should
not be given a restrictive and narrow interpretation, as to defeat the very object for which the franchise was granted. The
poles as contemplated thereon, should be understood and taken as a part of the electric power system of the respondent
Meralco, for the conveyance of electric current from the source thereof to its consumers. If the respondent would be
required to employ "wooden poles", or "rounded poles" as it used to do fifty years back, then one should admit that the
Philippines is one century behind the age of space. It should also be conceded by now that steel towers, like the ones in
question, for obvious reasons, can better effectuate the purpose for which the respondent's franchise was granted.
Granting for the purpose of argument that the steel supports or towers in question are not embraced within the term poles,
the logical question posited is whether they constitute real properties, so that they can be subject to a real property tax.
The tax law does not provide for a definition of real property; but Article 415 of the Civil Code does, by stating the
following are immovable property:
(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;
xxx

xxx

xxx

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom
without breaking the material or deterioration of the object;
xxx

xxx

xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or
works which may be carried in a building or on a piece of land, and which tends directly to meet the needs of the
said industry or works;
xxx

xxx

xxx

The steel towers or supports in question, do not come within the objects mentioned in paragraph 1, because they do not
constitute buildings or constructions adhered to the soil. They are not construction analogous to buildings nor adhering to
the soil. As per description, given by the lower court, they are removable and merely attached to a square metal frame by
means of bolts, which when unscrewed could easily be dismantled and moved from place to place. They can not be
included under paragraph 3, as they are not attached to an immovable in a fixed manner, and they can be separated
without breaking the material or causing deterioration upon the object to which they are attached. Each of these steel
towers or supports consists of steel bars or metal strips, joined together by means of bolts, which can be disassembled by
unscrewing the bolts and reassembled by screwing the same. These steel towers or supports do not also fall under
paragraph 5, for they are not machineries, receptacles, instruments or implements, and even if they were, they are not
intended for industry or works on the land. Petitioner is not engaged in an industry or works in the land in which the steel
supports or towers are constructed.
It is finally contended that the CTA erred in ordering the City Treasurer of Quezon City to refund the sum of P11,651.86,
despite the fact that Quezon City is not a party to the case. It is argued that as the City Treasurer is not the real party in
interest, but Quezon City, which was not a party to the suit, notwithstanding its capacity to sue and be sued, he should not
be ordered to effect the refund. This question has not been raised in the court below, and, therefore, it cannot be properly
raised for the first time on appeal. The herein petitioner is indulging in legal technicalities and niceties which do not help
him any; for factually, it was he (City Treasurer) whom had insisted that respondent herein pay the real estate taxes,
which respondent paid under protest. Having acted in his official capacity as City Treasurer of Quezon City, he would
surely know what to do, under the circumstances.
IN VIEW HEREOF, the decision appealed from is hereby affirmed, with costs against the petitioners.

15. 114 SCRA 273

MANILA ELECTRIC COMPANY vs. CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT
APPEALS OF BATANGAS and PROVINCIAL ASSESSOR OF BATANGAS (G.R. No. L-47943 May 31, 1982)
This case is about the imposition of the realty tax on two oil storage tanks installed in 1969 by Manila Electric Company on
a lot in San Pascual, Batangas which it leased in 1968 from Caltex (Phil.), Inc. The tanks are within the Caltex refinery
compound. They have a total capacity of 566,000 barrels. They are used for storing fuel oil for Meralco's power plants.
According to Meralco, the storage tanks are made of steel plates welded and assembled on the spot. Their bottoms rest
on a foundation consisting of compacted earth as the outermost layer, a sand pad as the intermediate layer and a twoinch thick bituminous asphalt stratum as the top layer. The bottom of each tank is in contact with the asphalt layer,
The steel sides of the tank are directly supported underneath by a circular wall made of concrete, eighteen inches thick, to
prevent the tank from sliding. Hence, according to Meralco, the tank is not attached to its foundation. It is not anchored or
welded to the concrete circular wall. Its bottom plate is not attached to any part of the foundation by bolts, screws or
similar devices. The tank merely sits on its foundation. Each empty tank can be floated by flooding its dike-inclosed
location with water four feet deep. (pp. 29-30, Rollo.)
On the other hand, according to the hearing commissioners of the Central Board of Assessment Appeals, the area where
the two tanks are located is enclosed with earthen dikes with electric steel poles on top thereof and is divided into two
parts as the site of each tank. The foundation of the tanks is elevated from the remaining area. On both sides of the
earthen dikes are two separate concrete steps leading to the foundation of each tank.
Tank No. 2 is supported by a concrete foundation with an asphalt lining about an inch thick. Pipelines were installed on
the sides of each tank and are connected to the pipelines of the Manila Enterprises Industrial Corporation whose buildings
and pumping station are near Tank No. 2.
The Board concludes that while the tanks rest or sit on their foundation, the foundation itself and the walls, dikes and
steps, which are integral parts of the tanks, are affixed to the land while the pipelines are attached to the tanks. (pp. 6061, Rollo.) In 1970, the municipal treasurer of Bauan, Batangas, on the basis of an assessment made by the provincial
assessor, required Meralco to pay realty taxes on the two tanks. For the five-year period from 1970 to 1974, the tax and
penalties amounted to P431,703.96 (p. 27, Rollo). The Board required Meralco to pay the tax and penalties as a condition
for entertaining its appeal from the adverse decision of the Batangas board of assessment appeals.
The Central Board of Assessment Appeals (composed of Acting Secretary of Finance Pedro M. Almanzor as chairman
and Secretary of Justice Vicente Abad Santos and Secretary of Local Government and Community Development Jose
Roo as members) in its decision dated November 5, 1976 ruled that the tanks together with the foundation, walls, dikes,
steps, pipelines and other appurtenances constitute taxable improvements.
Meralco received a copy of that decision on February 28, 1977. On the fifteenth day, it filed a motion for reconsideration
which the Board denied in its resolution of November 25, 1977, a copy of which was received by Meralco on February 28,
1978.
On March 15, 1978, Meralco filed this special civil action of certiorari to annul the Board's decision and resolution. It
contends that the Board acted without jurisdiction and committed a grave error of law in holding that its storage tanks are
taxable real property.
Meralco contends that the said oil storage tanks do not fall within any of the kinds of real property enumerated in article
415 of the Civil Code and, therefore, they cannot be categorized as realty by nature, by incorporation, by destination nor
by analogy. Stress is laid on the fact that the tanks are not attached to the land and that they were placed on leased land,
not on the land owned by Meralco.
This is one of those highly controversial, borderline or penumbral cases on the classification of property where strong
divergent opinions are inevitable. The issue raised by Meralco has to be resolved in the light of the provisions of the
Assessment Law, Commonwealth Act No. 470, and the Real Property Tax Code, Presidential Decree No. 464 which took
effect on June 1, 1974.

Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land, buildings, machinery,
and other improvements" not specifically exempted in section 3 thereof. This provision is reproduced with some
modification in the Real Property Tax Code which provides:
Sec. 38. Incidence of Real Property Tax. They shall be levied, assessed and collected in all provinces,
cities and municipalities an annual ad valorem tax on real property, such as land, buildings, machinery
and other improvements affixed or attached to real property not hereinafter specifically exempted.
The Code contains the following definition in its section 3:
k) Improvements is a valuable addition made to property or an amelioration in its condition, amounting
to more than mere repairs or replacement of waste, costing labor or capital and intended to enhance its
value, beauty or utility or to adapt it for new or further purposes.
We hold that while the two storage tanks are not embedded in the land, they may, nevertheless, be considered as
improvements on the land, enhancing its utility and rendering it useful to the oil industry. It is undeniable that the two tanks
have been installed with some degree of permanence as receptacles for the considerable quantities of oil needed by
Meralco for its operations.
Oil storage tanks were held to be taxable realty in Standard Oil Co. of New Jersey vs. Atlantic City, 15 Atl. 2nd 271.
For purposes of taxation, the term "real property" may include things which should generally be regarded as personal
property(84 C.J.S. 171, Note 8). 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 (Standard Oil Co. of New York vs. Jaramillo, 44
Phil. 630, 633).
The case of Board of Assessment Appeals vs. Manila Electric Company, 119 Phil. 328, wherein Meralco's steel towers
were held not to be subject to realty tax, is not in point because in that case the steel towers were regarded as poles and
under its franchise Meralco's poles are exempt from taxation. Moreover, the steel towers were not attached to any land or
building. They were removable from their metal frames.
Nor is there any parallelism between this case and Mindanao Bus Co. vs. City Assessor, 116 Phil. 501, where the tools
and equipment in the repair, carpentry and blacksmith shops of a transportation company were held not subject to realty
tax because they were personal property.
WHEREFORE, the petition is dismissed. The Board's questioned decision and resolution are affirmed. No costs.
SO ORDERED.

16. 50 PHIL 512

LEON SIBAL vs. EMILIANO J. VALDEZ ET AL., EMILIANO J. VALDEZ (G.R. No. L-26278, August 4, 1927)
The action was commenced in the Court of First Instance of the Province of Tarlac on the 14th day of December 1924.
The facts are about as conflicting as it is possible for facts to be, in the trial causes.
As a first cause of action the 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 described in
the complaint in the third paragraph of the first cause of action; 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.
As a second cause of action, the plaintiff alleged that the defendant Emiliano J. Valdez was attempting to harvest the
palay planted in four of the seven parcels mentioned in the first cause of action; that he had harvested and taken
possession of the palay in one of said seven parcels and in another parcel described in the second cause of action,
amounting to 300 cavans; and that all of said palay belonged to the plaintiff.
Plaintiff prayed that a writ of preliminary injunction be issued against the defendant Emiliano J. Valdez his attorneys and
agents, restraining them (1) from distributing him in the possession of the parcels of land described in the complaint; (2)
from taking possession of, or harvesting the sugar cane in question; and (3) from taking possession, or harvesting the
palay in said parcels of land. Plaintiff also prayed that a judgment be rendered in his favor and against the defendants
ordering them to consent to the redemption of the sugar cane in question, and that the defendant Valdez be condemned
to pay to the plaintiff the sum of P1,056 the value of palay harvested by him in the two parcels above-mentioned ,with
interest and costs.
On December 27, 1924, the court, after hearing both parties and upon approval of the bond for P6,000 filed by the
plaintiff, issued the writ of preliminary injunction prayed for in the complaint.
The defendant Emiliano J. Valdez, in his amended answer, denied generally and specifically each and every allegation of
the complaint and step up the following defenses:
(a) That the sugar cane in question had the nature of personal property and was not, therefore, subject to
redemption;
(b) That he was the owner of parcels 1, 2 and 7 described in the first cause of action of the complaint;
(c) That he was the owner of the palay in parcels 1, 2 and 7; and
(d) That he never attempted to harvest the palay in parcels 4 and 5.
The defendant Emiliano J. Valdez by way of counterclaim, alleged that by reason of the preliminary injunction he was
unable to gather the sugar cane, sugar-cane shoots (puntas de cana dulce) palay in said parcels of land, representing a
loss to him of P8,375.20 and that, in addition thereto, he suffered damages amounting to P3,458.56. He prayed, for a
judgment (1) absolving him from all liability under the complaint; (2) declaring him to be the absolute owner of the sugar
cane in question and of the palay in parcels 1, 2 and 7; and (3) ordering the plaintiff to pay to him the sum of P11,833.76,
representing the value of the sugar cane and palay in question, including damages.
Upon the issues thus presented by the pleadings the cause was brought on for trial. After hearing the evidence, and on
April 28, 1926, the Honorable Cayetano Lukban, judge, rendered a judgment against the plaintiff and in favor of the
defendants
(1) Holding that the sugar cane in question was personal property and, as such, was not subject to redemption;
(2) Absolving the defendants from all liability under the complaint; and

(3) Condemning the plaintiff and his sureties Cenon de la Cruz, Juan Sangalang and Marcos Sibal to jointly and
severally pay to the defendant Emiliano J. Valdez the sum of P9,439.08 as follows:
(a) P6,757.40, the value of the sugar cane;
(b) 1,435.68, the value of the sugar-cane shoots;
(c) 646.00, the value of palay harvested by plaintiff;
(d) 600.00, the value of 150 cavans of palay which the defendant was not able to raise by reason of the
injunction, at P4 cavan. 9,439.08 From that judgment the plaintiff appealed and in his assignments of
error contends that the lower court erred: (1) In holding that the sugar cane in question was personal
property and, therefore, not subject to redemption;
(2) In holding that parcels 1 and 2 of the complaint belonged to Valdez, as well as parcels 7 and 8, and that the
palay therein was planted by Valdez;
(3) In holding that Valdez, by reason of the preliminary injunction failed to realized P6,757.40 from the sugar cane
and P1,435.68 from sugar-cane shoots (puntas de cana dulce);
(4) In holding that, for failure of plaintiff to gather the sugar cane on time, the defendant was unable to raise palay
on the land, which would have netted him the sum of P600; and.
(5) In condemning the plaintiff and his sureties to pay to the defendant the sum of P9,439.08.
It appears from the record:
(1) That on May 11, 1923, the deputy sheriff of the Province of Tarlac, by virtue of writ of execution in civil case
No. 20203 of the Court of First Instance of Manila (Macondray & Co., Inc. vs. Leon Sibal),levied an attachment on
eight parcels of land belonging to said Leon Sibal, situated in the Province of Tarlac, designated in the second of
attachment as parcels 1, 2, 3, 4, 5, 6, 7 and 8 (Exhibit B, Exhibit 2-A).
(2) That on July 30, 1923, Macondray & Co., Inc., bought said eight parcels of land, at the auction held by the
sheriff of the Province of Tarlac, for the sum to P4,273.93, having paid for the said parcels separately as follows
(Exhibit C, and 2-A):

Parcel
1 .....................................................................

P1.00

2 .....................................................................

2,000.00

3 .....................................................................

120.93

4 .....................................................................

1,000.00

5 .....................................................................

1.00

6 .....................................................................

1.00

7 with the house thereon ..........................

8 .....................................................................

150.00
1,000.00
==========
4,273.93

(3) That within one year from the sale of said parcel of land, and on the 24th day of September, 1923, the
judgment debtor, Leon Sibal, paid P2,000 to Macondray & Co., Inc., for the account of the redemption price of
said parcels of land, without specifying the particular parcels to which said amount was to applied. The

redemption price said eight parcels was reduced, by virtue of said transaction, to P2,579.97 including interest
(Exhibit C and 2).
The record further shows:
(1) That on April 29, 1924, the defendant Vitaliano Mamawal, deputy sheriff of the Province of Tarlac, by virtue of
a writ of execution in civil case No. 1301 of the Province of Pampanga (Emiliano J. Valdez vs. Leon Sibal 1.
the same parties in the present case), attached the personal property of said Leon Sibal located in Tarlac, among
which was included the sugar cane now in question in the seven parcels of land described in the complaint
(Exhibit A).
(2) That on May 9 and 10, 1924, said deputy sheriff sold at public auction said personal properties of Leon Sibal,
including the sugar cane in question to Emilio J. Valdez, who paid therefor the sum of P1,550, of which P600 was
for the sugar cane (Exhibit A).
(3) That on April 29,1924, said deputy sheriff, by virtue of said writ of execution, also attached the real property of
said Leon Sibal in Tarlac, including all of his rights, interest and participation therein, which real property
consisted of eleven parcels of land and a house and camarin situated in one of said parcels (Exhibit A).
(4) That on June 25, 1924, eight of said eleven parcels, including the house and the camarin, were bought by
Emilio J. Valdez at the auction held by the sheriff for the sum of P12,200. Said eight parcels were designated in
the certificate of sale as parcels 1, 3, 4, 5, 6, 7, 10 and 11. The house and camarin were situated on parcel 7
(Exhibit A).
(5) That the remaining three parcels, indicated in the certificate of the sheriff as parcels 2, 12, and 13, were
released from the attachment by virtue of claims presented by Agustin Cuyugan and Domiciano Tizon (Exhibit A).
(6) That on the same date, June 25, 1924, Macondray & Co. sold and conveyed to Emilio J. Valdez for P2,579.97
all of its rights and interest in the eight parcels of land acquired by it at public auction held by the deputy sheriff of
Tarlac in connection with civil case No. 20203 of the Court of First Instance of Manila, as stated above. Said
amount represented the unpaid balance of the redemption price of said eight parcels, after payment by Leon Sibal
of P2,000 on September 24, 1923, fro the account of the redemption price, as stated above. (Exhibit C and 2).
The foregoing statement of facts shows:
(1) The Emilio J. Valdez bought the sugar cane in question, located in the seven parcels of land described in the
first cause of action of the complaint at public auction on May 9 and 10, 1924, for P600.
(2) That on July 30, 1923, Macondray & Co. became the owner of eight parcels of land situated in the Province of
Tarlac belonging to Leon Sibal and that on September 24, 1923, Leon Sibal paid to Macondray & Co. P2,000 for
the account of the redemption price of said parcels.
(3) That on June 25, 1924, Emilio J. Valdez acquired from Macondray & Co. all of its rights and interest in the said
eight parcels of land.
(4) That on June 25, 1924, Emilio J. Valdez also acquired all of the rights and interest which Leon Sibal had or
might have had on said eight parcels by virtue of the P2,000 paid by the latter to Macondray.
(5) That Emilio J. Valdez became the absolute owner of said eight parcels of land.
The first question raised by the appeal is, whether the sugar cane in question is personal or real property. It is contended
that sugar cane comes under the classification of real property as "ungathered products" in paragraph 2 of article 334 of
the Civil Code. Said paragraph 2 of article 334 enumerates as real property the following: Trees, plants, and ungathered
products, while they are annexed to the land or form an integral part of any immovable property." That article, however,
has received in recent years an interpretation by the Tribunal Supremo de Espaa, which holds that, under certain
conditions, growing crops may be considered as personal property. (Decision of March 18, 1904, vol. 97, Civil
Jurisprudence of Spain.)

Manresa, the eminent commentator of the Spanish Civil Code, in discussing section 334 of the Civil Code, in view of the
recent decisions of the supreme Court of Spain, admits that growing crops are sometimes considered and treated as
personal property. He says:
No creemos, sin embargo, que esto excluya la excepcionque muchos autores hacen tocante a la venta de toda
cosecha o de parte de ella cuando aun no esta cogida (cosa frecuente con la uvay y la naranja), y a la de lenas,
considerando ambas como muebles. El Tribunal Supremo, en sentencia de 18 de marzo de 1904, al entender
sobre un contrato de arrendamiento de un predio rustico, resuelve que su terminacion por desahucio no extingue
los derechos del arrendario, para recolectar o percibir los frutos correspondientes al ao agricola, dentro del que
nacieron aquellos derechos, cuando el arrendor ha percibido a su vez el importe de la renta integra
correspondiente, aun cuando lo haya sido por precepto legal durante el curso del juicio, fundandose para ello, no
solo en que de otra suerte se daria al desahucio un alcance que no tiene, sino en que, y esto es lo interesante a
nuestro proposito, la consideracion de inmuebles que el articulo 334 del Codigo Civil atribuge a los frutos
pendientes, no les priva del caracter de productos pertenecientes, como tales, a quienes a ellos tenga derecho,
Ilegado el momento de su recoleccion.
xxx

xxx

xxx

Mas actualmente y por virtud de la nueva edicion de la Ley Hipotecaria, publicada en 16 de diciembre de 1909,
con las reformas introducidas por la de 21 de abril anterior, la hipoteca, salvo pacto expreso que disponga lo
contrario, y cualquiera que sea la naturaleza y forma de la obligacion que garantice, no comprende los
frutos cualquiera que sea la situacion en que se encuentre. (3 Manresa, 5. edicion, pags. 22, 23.)
From the foregoing it appears (1) that, under Spanish authorities, pending fruits and ungathered products may be sold
and transferred as personal property; (2) that the Supreme Court of Spain, in a case of ejectment of a lessee of an
agricultural land, held that the lessee was entitled to gather the products corresponding to the agricultural year, because
said fruits did not go with the land but belonged separately to the lessee; and (3) that under the Spanish Mortgage Law of
1909, as amended, the mortgage of a piece of land does not include the fruits and products existing thereon, unless the
contract expressly provides otherwise.
An examination of the decisions of the Supreme Court of Louisiana may give us some light on the question which we are
discussing. Article 465 of the Civil Code of Louisiana, which corresponds to paragraph 2 of article 334 of our Civil Code,
provides: "Standing crops and the fruits of trees not gathered, and trees before they are cut down, are likewise
immovable, and are considered as part of the land to which they are attached."
The Supreme Court of Louisiana having occasion to interpret that provision, held that in some cases "standing crops" may
be considered and dealt with as personal property. In the case of Lumber Co. vs. Sheriff and Tax Collector (106 La., 418)
the Supreme Court said: "True, by article 465 of the Civil Code it is provided that 'standing crops and the fruits of trees not
gathered and trees before they are cut down . . . are considered as part of the land to which they are attached, but the
immovability provided for is only one in abstracto and without reference to rights on or to the crop acquired by others than
the owners of the property to which the crop is attached. . . . The existence of a right on the growing crop is a mobilization
by anticipation, a gathering as it were in advance, rendering the crop movable quoad the right acquired therein. Our
jurisprudence recognizes the possible mobilization of the growing crop." (Citizens' Bank vs. Wiltz, 31 La. Ann., 244;
Porche vs. Bodin, 28 La., Ann., 761; Sandel vs. Douglass, 27 La. Ann., 629; Lewis vs. Klotz, 39 La. Ann., 267.)
"It is true," as the Supreme Court of Louisiana said in the case of Porche vs. Bodin (28 La. An., 761) that "article 465 of
the Revised Code says that standing crops are considered as immovable and as part of the land to which they are
attached, and article 466 declares that the fruits of an immovable gathered or produced while it is under seizure are
considered as making part thereof, and incurred to the benefit of the person making the seizure. But the evident meaning
of these articles, is where the crops belong to the owner of the plantation they form part of the immovable, and where it is
seized, the fruits gathered or produced inure to the benefit of the seizing creditor.
A crop raised on leased premises in no sense forms part of the immovable. It belongs to the lessee, and may be
sold by him, whether it be gathered or not, and it may be sold by his judgment creditors. If it necessarily forms
part of the leased premises the result would be that it could not be sold under execution separate and apart from
the land. If a lessee obtain supplies to make his crop, the factor's lien would not attach to the crop as a separate
thing belonging to his debtor, but the land belonging to the lessor would be affected with the recorded privilege.
The law cannot be construed so as to result in such absurd consequences.
In the case of Citizen's Bank vs. Wiltz (31 La. Ann., 244)the court said:

If the crop quoad the pledge thereof under the act of 1874 was an immovable, it would be destructive of the very
objects of the act, it would render the pledge of the crop objects of the act, it would render the pledge of the crop
impossible, for if the crop was an inseparable part of the realty possession of the latter would be necessary to that
of the former; but such is not the case. True, by article 465 C. C. it is provided that "standing crops and the fruits
of trees not gathered and trees before they are cut down are likewise immovable and are considered as part of
the land to which they are attached;" but the immovability provided for is only one in abstracto and without
reference to rights on or to the crop acquired by other than the owners of the property to which the crop was
attached. The immovability of a growing crop is in the order of things temporary, for the crop passes from the
state of a growing to that of a gathered one, from an immovable to a movable. The existence of a right on the
growing crop is a mobilization by anticipation, a gathering as it were in advance, rendering the crop
movable quoad the right acquired thereon. The provision of our Code is identical with the Napoleon Code 520,
and we may therefore obtain light by an examination of the jurisprudence of France.
The rule above announced, not only by the Tribunal Supremo de Espaa but by the Supreme Court of Louisiana, is
followed in practically every state of the Union.
From an examination of the reports and codes of the State of California and other states we find that the settle doctrine
followed in said states in connection with the attachment of property and execution of judgment is, that growing crops
raised by yearly labor and cultivation are considered personal property. (6 Corpuz Juris, p. 197; 17 Corpus Juris, p. 379;
23 Corpus Juris, p. 329: Raventas vs. Green, 57 Cal., 254; Norris vs. Watson, 55 Am. Dec., 161; Whipple vs. Foot, 3 Am.
Dec., 442; 1 Benjamin on Sales, sec. 126; McKenzie vs. Lampley, 31 Ala., 526; Crine vs. Tifts and Co., 65 Ga., 644;
Gillitt vs. Truax, 27 Minn., 528; Preston vs. Ryan, 45 Mich., 174; Freeman on Execution, vol. 1, p. 438; Drake on
Attachment, sec. 249; Mechem on Sales, sec. 200 and 763.)
Mr. Mechem says that a valid sale may be made of a thing, which though not yet actually in existence, is reasonably
certain to come into existence as the natural increment or usual incident of something already in existence, and then
belonging to the vendor, and then title will vest in the buyer the moment the thing comes into existence.
(Emerson vs. European Railway Co., 67 Me., 387; Cutting vs. Packers Exchange, 21 Am. St. Rep., 63.) Things of this
nature are said to have a potential existence. A man may sell property of which he is potentially and not actually
possessed. He may make a valid sale of the wine that a vineyard is expected to produce; or the gain a field may grow in a
given time; or the milk a cow may yield during the coming year; or the wool that shall thereafter grow upon sheep; or what
may be taken at the next cast of a fisherman's net; or fruits to grow; or young animals not yet in existence; or the good will
of a trade and the like. The thing sold, however, must be specific and identified. They must be also owned at the time by
the vendor. (Hull vs. Hull, 48 Conn., 250 [40 Am. Rep., 165].)
It is contended on the part of the appellee that paragraph 2 of article 334 of the Civil Code has been modified by section
450 of the Code of Civil Procedure as well as by Act No. 1508, the Chattel Mortgage Law. Said section 450 enumerates
the property of a judgment debtor which may be subjected to execution. The pertinent portion of said section reads as
follows: "All goods, chattels, moneys, and other property, both real and personal, * * * shall be liable to execution. Said
section 450 and most of the other sections of the Code of Civil Procedure relating to the execution of judgment were taken
from the Code of Civil Procedure of California. The Supreme Court of California, under section 688 of the Code of Civil
Procedure of that state (Pomeroy, p. 424) has held, without variation, that growing crops were personal property and
subject to execution.
Act No. 1508, the Chattel Mortgage Law, fully recognized that growing crops are personal property. Section 2 of said Act
provides: "All personal property shall be subject to mortgage, agreeably to the provisions of this Act, and a mortgage
executed in pursuance thereof shall be termed a chattel mortgage." Section 7 in part provides: "If growing crops be
mortgaged the mortgage may contain an agreement stipulating that the mortgagor binds himself properly to tend, care for
and protect the crop while growing.
It is clear from the foregoing provisions that Act No. 1508 was enacted on the assumption that "growing crops" are
personal property. This consideration tends to support the conclusion hereinbefore stated, that paragraph 2 of article 334
of the Civil Code has been modified by section 450 of Act No. 190 and by Act No. 1508 in the sense that "ungathered
products" as mentioned in said article of the Civil Code have the nature of personal property. In other words, the phrase
"personal property" should be understood to include "ungathered products."
At common law, and generally in the United States, all annual crops which are raised by yearly manurance and
labor, and essentially owe their annual existence to cultivation by man, . may be levied on as personal property."
(23 C. J., p. 329.) On this question Freeman, in his treatise on the Law of Executions, says: "Crops, whether
growing or standing in the field ready to be harvested, are, when produced by annual cultivation, no part of the

realty. They are, therefore, liable to voluntary transfer as chattels. It is equally well settled that they may be seized
and sold under execution. (Freeman on Executions, vol. p. 438.)
We may, therefore, 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 Mortgage Law, "ungathered products" have the nature of personal property. The lower court,
therefore, committed no error in holding that the sugar cane in question was personal property and, as such, was not
subject to redemption.
All the other assignments of error made by the appellant, as above stated, relate to questions of fact only. Before entering
upon a discussion of said assignments of error, we deem it opportune to take special notice of the failure of the plaintiff to
appear at the trial during the presentation of evidence by the defendant. His absence from the trial and his failure to crossexamine the defendant have lent considerable weight to the evidence then presented for the defense.
Coming not to the ownership of parcels 1 and 2 described in the first cause of action of the complaint, the plaintiff made a
futile attempt to show that said two parcels belonged to Agustin Cuyugan and were the identical parcel 2 which was
excluded from the attachment and sale of real property of Sibal to Valdez on June 25, 1924, as stated above. A
comparison of the description of parcel 2 in the certificate of sale by the sheriff (Exhibit A) and the description of parcels 1
and 2 of the complaint will readily show that they are not the same.
The description of the parcels in the complaint is as follows:
1. La caa dulce sembrada por los inquilinos del ejecutado Leon Sibal 1. en una parcela de terreno de la
pertenencia del citado ejecutado, situada en Libutad, Culubasa, Bamban, Tarlac, de unas dos hectareas poco
mas o menos de superficie.
2. La caa dulce sembrada por el inquilino del ejecutado Leon Sibal 1., Ilamado Alejandro Policarpio, en una
parcela de terreno de la pertenencia del ejecutado, situada en Dalayap, Culubasa, Bamban, Tarlac de unas dos
hectareas de superficie poco mas o menos." The description of parcel 2 given in the certificate of sale (Exhibit A)
is as follows:
2a. Terreno palayero situado en Culubasa, Bamban, Tarlac, de 177,090 metros cuadrados de superficie, linda al
N. con Canuto Sibal, Esteban Lazatin and Alejandro Dayrit; al E. con Francisco Dizon, Felipe Mau and others; al
S. con Alejandro Dayrit, Isidro Santos and Melecio Mau; y al O. con Alejandro Dayrit and Paulino Vergara. Tax
No. 2854, vador amillarado P4,200 pesos.
On the other hand the evidence for the defendant purported to show that parcels 1 and 2 of the complaint were included
among the parcels bought by Valdez from Macondray on June 25, 1924, and corresponded to parcel 4 in the deed of sale
(Exhibit B and 2), and were also included among the parcels bought by Valdez at the auction of the real property of Leon
Sibal on June 25, 1924, and corresponded to parcel 3 in the certificate of sale made by the sheriff (Exhibit A). The
description of parcel 4 (Exhibit 2) and parcel 3 (Exhibit A) is as follows:
Parcels No. 4. Terreno palayero, ubicado en el barrio de Culubasa,Bamban, Tarlac, I. F. de 145,000 metros
cuadrados de superficie, lindante al Norte con Road of the barrio of Culubasa that goes to Concepcion; al Este
con Juan Dizon; al Sur con Lucio Mao y Canuto Sibal y al Oeste con Esteban Lazatin, su valor amillarado
asciende a la suma de P2,990. Tax No. 2856.
As will be noticed, there is hardly any relation between parcels 1 and 2 of the complaint and parcel 4 (Exhibit 2 and B) and
parcel 3 (Exhibit A). But, inasmuch as the plaintiff did not care to appear at the trial when the defendant offered his
evidence, we are inclined to give more weight to the evidence adduced by him that to the evidence adduced by the
plaintiff, with respect to the ownership of parcels 1 and 2 of the compliant. We, therefore, conclude that parcels 1 and 2 of
the complaint belong to the defendant, having acquired the same from Macondray & Co. on June 25, 1924, and from the
plaintiff Leon Sibal on the same date.
It appears, however, that the plaintiff planted the palay in said parcels and harvested therefrom 190 cavans. There being
no evidence of bad faith on his part, he is therefore entitled to one-half of the crop, or 95 cavans. He should therefore be
condemned to pay to the defendant for 95 cavans only, at P3.40 a cavan, or the sum of P323, and not for the total of 190
cavans as held by the lower court.

As to the ownership of parcel 7 of the complaint, the evidence shows that said parcel corresponds to parcel 1 of the deed
of sale of Macondray & Co, to Valdez (Exhibit B and 2), and to parcel 4 in the certificate of sale to Valdez of real property
belonging to Sibal, executed by the sheriff as above stated (Exhibit A). Valdez is therefore the absolute owner of said
parcel, having acquired the interest of both Macondray and Sibal in said parcel.
With reference to the parcel of land in Pacalcal, Tarlac, described in paragraph 3 of the second cause of action, it appears
from the testimony of the plaintiff himself that said parcel corresponds to parcel 8 of the deed of sale of Macondray to
Valdez (Exhibit B and 2) and to parcel 10 in the deed of sale executed by the sheriff in favor of Valdez (Exhibit A). Valdez
is therefore the absolute owner of said parcel, having acquired the interest of both Macondray and Sibal therein.
In this connection the following facts are worthy of mention:
Execution in favor of Macondray & Co., May 11, 1923. Eight parcels of land were attached under said execution. Said
parcels of land were sold to Macondray & Co. on the 30th day of July, 1923. Rice paid P4,273.93. On September 24,
1923, Leon Sibal paid to Macondray & Co. P2,000 on the redemption of said parcels of land. (See Exhibits B and C ).
Attachment, April 29, 1924, in favor of Valdez. Personal property of Sibal was attached, including the sugar cane in
question. (Exhibit A) The said personal property so attached, sold at public auction May 9 and 10, 1924. April 29, 1924,
the real property was attached under the execution in favor of Valdez (Exhibit A). June 25, 1924, said real property was
sold and purchased by Valdez (Exhibit A).
June 25, 1924, Macondray & Co. sold all of the land which they had purchased at public auction on the 30th day of July,
1923, to Valdez.
As to the loss of the defendant in sugar cane by reason of the injunction, the evidence shows that the sugar cane in
question covered an area of 22 hectares and 60 ares (Exhibits 8, 8-b and 8-c); that said area would have yielded an
average crop of 1039 picos and 60 cates; that one-half of the quantity, or 519 picos and 80 cates would have
corresponded to the defendant, as owner; that during the season the sugar was selling at P13 a pico (Exhibit 5 and 5-A).
Therefore, the defendant, as owner, would have netted P 6,757.40 from the sugar cane in question. The evidence also
shows that the defendant could have taken from the sugar cane 1,017,000 sugar-cane shoots (puntas de cana) and not
1,170,000 as computed by the lower court. During the season the shoots were selling at P1.20 a thousand (Exhibits 6 and
7). The defendant therefore would have netted P1,220.40 from sugar-cane shoots and not P1,435.68 as allowed by the
lower court.
As to the palay harvested by the plaintiff in parcels 1 and 2 of the complaint, amounting to 190 cavans, one-half of said
quantity should belong to the plaintiff, as stated above, and the other half to the defendant. The court erred in awarding
the whole crop to the defendant. The plaintiff should therefore pay the defendant for 95 cavans only, at P3.40 a cavan, or
P323 instead of P646 as allowed by the lower court.
The evidence also shows that the defendant was prevented by the acts of the plaintiff from cultivating about 10 hectares
of the land involved in the litigation. He expected to have raised about 600 cavans of palay, 300 cavans of which would
have corresponded to him as owner. The lower court has wisely reduced his share to 150 cavans only. At P4 a cavan, the
palay would have netted him P600.
In view of the foregoing, the judgment appealed from is hereby modified. The plaintiff and his sureties Cenon de la Cruz,
Juan Sangalang and Marcos Sibal are hereby ordered to pay to the defendant jointly and severally the sum of P8,900.80,
instead of P9,439.08 allowed by the lower court, as follows:
P6,757.40
1,220.40

for the sugar cane;

for the sugar cane shoots;

323.00

for the palay harvested by plaintiff in parcels 1 and 2;

600.00

for the palay which defendant could have raised.

8,900.80
============

In all other respects, the judgment appealed from is hereby affirmed, with costs. So ordered.

17. 7 SCRA 625

RICARDO PRESBITERO, in his capacity as Executor of the Testate Estate of EPERIDION PRESBITERO, vs. THE
HON. JOSE F. FERNANDEZ, HELEN CARAM NAVA, and the PROVINCIAL SHERIFF OF NEGROS OCCIDENTAL
(G.R. No. L-19527, March 30, 1963)
Petition for a writ of certiorari against the Court of First Instance of Negros Occidental.
It appears that during the lifetime of Esperidion Presbitero, judgment was rendered against him by the Court of Appeals
on October 14, 1959, in CA-G.R. No. 20879,
... to execute in favor of the plaintiff, within 30 days from the time this judgment becomes final, a deed of
reconveyance of Lot No. 788 of the cadastral survey of Valladolid, free from all liens and encumbrances, and
another deed of reconveyance of a 7-hectare portion of Lot No. 608 of the same cadastral survey, also free from
all liens and encumbrances, or, upon failure to do so, to pay to the plaintiff the value of each of the said
properties, as may be determined by the Court a quo upon evidence to be presented by the parties before it. The
defendant is further adjudged to pay to the plaintiff the value of the products received by him from the 5-hectare
portion equivalent to 20 cavans of palay per hectare every year, or 125 cavans yearly, at the rate of P10.00 per
cavan, from 1951 until possession of the said 5-hectare portion is finally delivered to the plaintiff with legal interest
thereon from the time the complaint was filed; and to pay to the plaintiff the sum of P1,000.00 by way of attorney's
fees, plus costs.
This judgment, which became final, was a modification of a decision of the Court of First Instance of Negros Occidental, in
its Civil Case No. 3492, entitled "Helen Caram Nava, plaintiff, versus Esperidion Presbitero, defendant."
Thereafter, plaintiff's counsel, in a letter dated December 8, 1959, sought in vain to amicably settle the case through
petitioner's son, Ricardo Presbitero. When no response was forthcoming, said counsel asked for, and the court a
quo ordered on June 9, 1960, the issuance of a partial writ of execution for the sum of P12,250.00. On the following day,
June 10, 1960, said counsel, in another friendly letter, reiterated his previous suggestion for an amicable settlement, but
the same produced no fruitful result. Thereupon, on June 21, 1960, the sheriff levied upon and garnished the sugar
quotas allotted to plantation audit Nos. 26-237, 26-238, 26-239, 26-240 and 26-241 adhered to the Ma-ao Mill District and
"registered in the name of Esperidion Presbitero as the original plantation-owner", furnishing copies of the writ of
execution and the notice of garnishment to the manager of the Ma-ao Sugar Central Company, Bago, Negros Occidental,
and the Sugar Quota Administration at Bacolod City, but without presenting for registration copies thereof to the Register
of Deeds.
Plaintiff Helen Caram Nava (herein respondent) then moved the court, on June 22, 1960, to hear evidence on the market
value of the lots; and after some hearings, occasionally protracted by postponements, the trial court, on manifestation of
defendant's willingness to cede the properties in litigation, suspended the proceedings and ordered him to segregate the
portion of Lot 608 pertaining to the plaintiff from the mass of properties belonging to the defendant within a period to
expire on August 24, 1960, and to effect the final conveyance of the said portion of Lot 608 and the whole of Lot 788 free
from any lien and encumbrance whatsoever. Because of Presbitero's failure to comply with this order within the time set
forth by the court, the plaintiff again moved on August 25, 1960 to declare the market value of the lots in question to be
P2,500.00 per hectare, based on uncontradicted evidence previously adduced. But the court, acting on a prayer of
defendant Presbitero, in an order dated August 27, 1960, granted him twenty (20) days to finalize the survey of Lot 608,
and ordered him to execute a reconveyance of Lot 788 not later than August 31, 1960. Defendant again defaulted; and so
plaintiff, on September 21, 1960, moved the court for payment by the defendant of the sum of P35,000.00 for the 14
hectares of land at P2,500.00 to the hectare, and the court, in its order dated September 24, 1960, gave the defendant
until October 15, 1960 either to pay the value of the 14 hectares at the rate given or to deliver the clean titles of the lots.
On October 15, 1960, the defendant finally delivered Certificate of Title No. T-28046 covering Lot 788, but not the title
covering Lot 608 because of an existing encumbrance in favor of the Philippine National Bank. In view thereof, Helen
Caram Nava moved for, and secured on October 19, 1960, a writ of execution for P17,500.00, and on the day following
wrote the sheriff to proceed with the auction sale of the sugar quotas previously scheduled for November 5, 1960. The
sheriff issued the notice of auction sale on October 20, 1960.
On October 22, 1960, death overtook the defendant Esperidion Presbitero.
Proceedings for the settlement of his estate were commenced in Special Proceedings No. 2936 of the Court of First
Instance of Negros Occidental; and on November 4, 1960, the special administrator, Ricardo Presbitero, filed an urgent
motion, in Case No. 3492, to set aside the writs of execution, and to order the sheriff to desist from holding the auction

sale on the grounds that the levy on the sugar quotas was invalid because the notice thereof was not registered with the
Register of Deeds, as for real property, and that the writs, being for sums of money, are unenforceable since Esperidion
Presbitero died on October 22, 1960, and, therefore, could only be enforced as a money claim against his estate.
This urgent motion was heard on November 5, 1960, but the auction sale proceeded on the same date, ending in the
plaintiff's putting up the highest bid for P34,970.11; thus, the sheriff sold 21,640 piculs of sugar quota to her.
On November 10, 1960, plaintiff Nava filed her opposition to Presbitero's urgent motion of November 4, 1960; the latter
filed on May 4, 1961 a supplement to his urgent motion; and on May 8 and 23, 1961, the court continued hearings on the
motion, and ultimately denied it on November 18, 1961.
On January 11, 1962, plaintiff Nava also filed an urgent motion to order the Ma-ao Sugar Central to register the sugar
quotas in her name and to deliver the rentals of these quotas corresponding to the crop year 1960-61 and succeeding
years to her. The court granted this motion in its order dated February 3, 1962. A motion for reconsideration by Presbitero
was denied in a subsequent order under date of March 5, 1962. Wherefore, Presbitero instituted the present proceedings
for certiorari.
A preliminary restraining writ was thereafter issued by the court against the respondents from implementing the aforesaid
orders of the respondent Judge, dated February 3, 1960 and March 5, 1962, respectively. The petition further seeks the
setting aside of the sheriff's certificate of sale of the sugar quotas made out in favor of Helen Caram Nava, and that she
be directed to file the judgment credit in her favor in Civil Case No. 3492 as a money claim in the proceedings to settle the
Estate of Esperidion Presbitero.
The petitioner denies having been personally served with notice of the garnishment of the sugar quotas, but this
disclaimer cannot be seriously considered since it appears that he was sent a copy of the notice through the chief of
police of Valladolid on June 21, 1960, as certified to by the sheriff, and that he had actual knowledge of the garnishment,
as shown by his motion of November 4, 1960 to set aside the writs of execution and to order the sheriff to desist from
holding the auction sale.
Squarely at issue in this case is whether sugar quotas are real (immovable) or personal properties. If they be realty, then
the levy upon them by the sheriff is null and void for lack of compliance with the procedure prescribed in Section 14, Rule
39, in relation with Section 7, Rule 59, of the Rules of Court requiring "the filing with the register of deeds a copy of the
orders together with a description of the property . . . ."
In contending that sugar quotas are personal property, the respondent, Helen Caram Nava, invoked the test formulated by
Manresa (3 Manresa, 6th Ed. 43), and opined that sugar quotas can be carried from place to place without injury to the
land to which they are attached, and are not one of those included in Article 415 of the Civil Code; and not being thus
included, they fall under the category of personal properties:
ART. 416. The following are deemed to be personal property:
xxx

xxx

xxx

4. In general, all things which can be transported from place to place without impairment of the real property to
which they are fixed.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this
Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this
stipulation of facts. 1wph1.t
Respondent likewise points to evidence she submitted that sugar quotas are, in fact, transferred apart from the plantations
to which they are attached, without impairing, destroying, or diminishing the potentiality of either quota or plantation. She
was sustained by the lower court when it stated that "it is a matter of public knowledge and it is universal practice in this
province, whose principal industry is sugar, to transfer by sale, lease, or otherwise, sugar quota allocations from one
plantation to any other" and that it is "specious to insist that quotas are improvements attaching to one plantation when in
truth and in fact they are no longer attached thereto for having been sold or leased away to be used in another plantation".
Respondent would add weight to her argument by invoking the role that sugar quotas play in our modern social and
economic life, and cites that the Sugar Office does not require any registration with the Register of Deeds for the validity
of the sale of these quotas; and, in fact, those here in question were not noted down in the certificate of title of the land to
which they pertain; and that Ricardo Presbitero had leased sugar quotas independently of the land. The respondent cites

further that the U.S.-Philippine Trade Relations Act, approved by the United States Congress in 1946, limiting the
production of unrefined sugar in the Philippines did not allocate the quotas for said unrefined sugar among lands planted
to sugarcane but among "the sugar producing mills and plantation OWNERS", and for this reason Section 3 of Executive
Order No. 873, issued by Governor General Murphy, authorizes the lifting of sugar allotments from one land to another by
means only of notarized deeds.
While respondent's arguments are thought-provoking, they cannot stand against the positive mandate of the pertinent
statute. The Sugar Limitation Law (Act 4166, as amended) provides
SEC. 9. The allotment corresponding to each piece of land under the provisions of this Act shall be deemed to be
an improvement attaching to the land entitled thereto ....
and Republic Act No. 1825 similarly provides
SEC. 4. The production allowance or quotas corresponding to each piece of land under the provisions of this Act shall be
deemed to be an improvement attaching to the land entitled thereto ....
And Executive Order No. 873 defines "plantation" as follows:
(a) The term 'plantation' means any specific area of land under sole or undivided ownership to which is attached
an allotment of centrifugal sugar.
Thus, under express provisions of law, the sugar quota allocations are accessories to land, and can not have independent
existence away from a plantation, although the latter may vary. Indeed, this Court held in the case ofAbelarde vs. Lopez,
74 Phil. 344, that even if a contract of sale of haciendas omitted "the right, title, interest, participation, action (and) rent"
which the grantors had or might have in relation to the parcels of land sold, the sale would include the quotas, it being
provided in Section 9, Act 4166, that the allotment is deemed an improvement attached to the land, and that at the time
the contract of sale was signed the land devoted to sugar were practically of no use without the sugar allotment.
As an improvement attached to land, by express provision of law, though not physically so united, the sugar quotas are
inseparable therefrom, just like servitudes and other real rights over an immovable. Article 415 of the Civil Code, in
enumerating what are immovable properties, names
10. Contracts for public works, and servitudes and other real rights over immovable property. (Emphasis supplied)
It is by law, therefore, that these properties are immovable or real, Article 416 of the Civil Code being made to apply only
when the thing (res) sought to be classified is not included in Article 415.
The fact that the Philippine Trade Act of 1946 (U.S. Public Law 371-79th Congress) allows transfers of sugar quotas does
not militate against their immovability. Neither does the fact that the Sugar Quota Office does not require registration of
sales of quotas with the Register of Deeds for their validity, nor the fact that allocation of unrefined sugar quotas is not
made among lands planted to sugarcane but among "the sugar producing mills and plantation OWNERS", since the lease
or sale of quotas are voluntary transactions, the regime of which, is not necessarily identical to involuntary transfers or
levies; and there cannot be a sugar plantation owner without land to which the quota is attached; and there can exist no
quota without there being first a corresponding plantation.
Since the levy is invalid for non-compliance with law, it is impertinent to discuss the survival or non-survival of claims after
the death of the judgment debtor, gauged from the moment of actual levy. Suffice it to state that, as the case presently
stands, the writs of execution are not in question, but the levy on the quotas, and, because of its invalidity, the levy
amount to no levy at all. Neither is it necessary, or desirable, to pass upon the conscionableness or unconscionableness
of the amount produced in the auction sale as compared with the actual value of the quotas inasmuch as the sale must
necessarily be also illegal.
As to the remedial issue that the respondents have presented: that certiorari does not lie in this case because the
petitioner had a remedy in the lower court to "suspend" the auction sale, but did not avail thereof, it may be stated that the
latter's urgent motion of November 4, 1960, a day before the scheduled sale (though unresolved by the court on time), did
ask for desistance from holding the sale. WHEREFORE, the preliminary injunction heretofore granted is hereby made
permanent, and the sheriff's certificate of sale of the sugar quotas in question declared null and void. Costs against
respondent Nava.

18. 21 PHIL 543

THE UNITED STATES vs. IGNACIO CARLOS (G.R. No. 6295, September 1, 1911)
PER CURIAM:
The information filed in this case is as follows:
The undersigned accuses Ignacio Carlos of the crime of theft, committed as follows:
That on, during, and between the 13th day of February, 1909, and the 3d day of March, 1910, in the city of
Manila, Philippine Islands, the said Ignacio Carlos, with intent of gain and without violence or intimidation against
the person or force against the thing, did then and there, willfully, unlawfully, and feloniously, take, steal , and
carry away two thousand two hundred and seventy-three (2,273) kilowatts of electric current, of the value of nine
hundred and nine (909) pesos and twenty (20) cents Philippine currency, the property of the Manila Electric
Railroad and Light Company, a corporation doing business in the Philippine Islands, without the consent of the
owner thereof; to the damage and prejudice of the said Manila Electric Railroad and Light Company in the said
sum of nine hundred and nine (909) pesos and twenty (20) cents Philippine currency, equal to and equivalent of
4,546 pesetas Philippine currency. All contrary to law.
(Sgd.) L. M. SOUTWORTH,
Prosecuting Attorney.
Subscribed and sworn to before me this 4th day of March, 1910, in the city of Manila, Philippine Islands, by L. M.
Southworth, prosecuting attorney for the city of Manila.
(Sgd.) CHARLES S. LOBINGIER,
Judge, First Instance.
A preliminary investigation has heretofore been conducted in this case, under my direction, having examined the
witness under oath, in accordance with the provisions of section 39 of Act No. 183 of the Philippine Commission,
as amended by section 2 of Act No. 612 of the Philippine Commission.
(Sgd) L. M. SOUTHWORTH,
Prosecuting Attorney.
Subscribed and sworn to before me this 4th day of March, 1910, in the city of Manila, Philippine Islands, by L. M.
Southworth, prosecuting attorney for the city of Manila.
(Sgd.) CHARLES LOBINGIER,
Judge, First Instance.
A warrant for the arrest of the defendant was issued by the Honorable J. C. Jenkins on the 4th of March and placed in the
hands of the sheriff. The sheriff's return shows that the defendant gave bond for his appearance. On the 14th of the same
month counsel for the defendant demurrer to the complaint on the following grounds:
1 That the court has no jurisdiction over the person of the accused nor of the offense charged because the
accused has not been accorded a preliminary investigation or examination as required by law and no court,
magistrate, or other competent authority has determined from a sworn complaint or evidence adduced that there
is probable cause to believe that a crime has been committed, or that this defendant has committed any crime.
2 That the facts charged do not constitute a public offense.
The demurrer was overruled on the same day and the defendant having refused to plead, a plea of not guilty was entered
by direction of the court for him and the trial proceeded.
After due consideration of all the proofs presented and the arguments of counsel the trial court found the defendant guilty
of the crime charged and sentenced him to one year eight months and twenty-one days' presidio correccional, to

indemnify the offended party, The Manila Electric Railroad and Light Company, in the sum of P865.26, to the
corresponding subsidiary imprisonment in case of insolvency and to the payment of the costs. From this judgment the
defendant appealed and makes the following assignments of error:
I.
The court erred in overruling the objection of the accused to the jurisdiction of the court, because he was not
given a preliminary investigation as required by law, and in overruling his demurrer for the same reason.
II.
The court erred in declaring the accused to be guilty, in view of the evidence submitted.
III.
The court erred in declaring that electrical energy may be stolen.
IV.
The court erred in not declaring that the plaintiff consented to the taking of the current.
V.
The court erred in finding the accused guilty of more than one offense.
VI.
The court erred in condemning the accused to pay P865.26 to the electric company as damages.
Exactly the same question as that raised in the first assignment of error, was after a through examination and due
consideration, decided adversely to appellant's contention in the case of U. S. vs. Grant and Kennedy (18 Phil. Rep.,
122). No sufficient reason is presented why we should not follow the doctrine enunciated in that case.
The question raised in the second assignment of error is purely one fact. Upon this point the trial court said:
For considerably more than a year previous to the filing of this complaint the accused had been a consumer of
electricity furnished by the Manila Electric Railroad and Light Company for a building containing the residence of
the accused and three other residences, and which was equipped, according to the defendant's testimony, with
thirty electric lights. On March 15, 1909, the representatives of the company, believing that more light was being
used than their meter showed, installed an additional meter (Exhibit A) on a pole outside of defendant's house,
and both it and the meter (Exhibit B) which had been previously installed in the house were read on said date.
Exhibit A read 218 kilowatt hours; Exhibit B, 745 kilowatt hours. On March 3, 1910 each was read again, Exhibit A
showing 2,718 kilowatt hours and Exhibit B, 968. It is undisputed that the current which supplied the house
passed through both meters and the city electrician testifies that each meter was tested on the date of the last
reading and was "in good condition." The result of this registration therefore is that while the outsider meter
(Exhibit A) showed a consumption in defendant's building of 2,500 kilowatt hours of electricity, this inside meter
(Exhibit B) showed but 223 kilowatt hours. In other words the actual consumption, according to the outside meter,
was more than ten times as great as that registered by the one inside. Obviously this difference could not be due
to normal causes, for while the electrician called by the defense (Lanusa) testifies to the possibility of a difference
between two such meters, he places the extreme limit of such difference between them 5 per cent. Here, as we
have seen, the difference is more than 900 per cent. Besides, according to the defendant's electrician, the outside
meter should normally run faster, while according to the test made in this case the inside meter (Exhibit B) ran the
faster. The city electrician also testifies that the electric current could have been deflected from the inside meter
by placing thereon a device known as a "jumper" connecting the two outside wires, and there is other testimony
that there were marks on the insulation of the meter Exhibit B which showed the use of such a device. There is a
further evidence that the consumption of 223 kilowatt hours, registered by the inside meter would not be a
reasonable amount for the number of lights installed in defendant's building during the period in question, and the
accused fails to explain why he should have had thirty lights installed if he needed but four or five.

On the strength of this showing a search warrant was issued for the examination of defendant's premises and was
duly served by a police officer (Hartpence). He was accompanied at the time by three employees of the Manila
Electric Railroad and Light Company, and he found there the accused, his wife and son, and perhaps one or two
others. There is a sharp conflict between the several spectators on some points but on one there is no dispute. All
agree that the "jumper" (Exhibit C) was found in a drawer of a small cabinet in the room of defendant's house
where the meter was installed and not more than 20 feet therefrom. In the absence of a satisfactory explanation
this constituted possession on defendant's part, and such possession, under the Code of Civil Procedure, section
334 (10), raises the presumption that the accused was the owner of a device whose only use was to deflect the
current from the meter.
Is there any other "satisfactory explanation" of the "jumper's" presence? The only one sought to be offered is the
statement by the son of the accused, a boy of twelve years, that he saw the "jumper" placed there by the witness
Porter, an employee of the Light Company. The boy is the only witness who so testifies and Porter himself
squarely denies it. We can not agree with counsel for the defense that the boy's interest in the outcome of this
case is less than that of the witness for the prosecution. It seems to us that his natural desire to shield his father
would far outweight any interest such an employee like Porter would have and which, at most, would be merely
pecuniary.
There is, however, one witness whom so far as appears, has no interest in the matter whatsoever. This is officer
Hartpence, who executed the search warrant. He testifies that after inspecting other articles and places in the
building as he and the other spectators, including the accused, approached the cabinet in which the "jumper" was
found, the officer's attention was called to the defendant's appearance and the former noticed that the latter was
becoming nervous. Where the only two witnesses who are supposed to know anything of the matter thus
contradict each other this item of testimony by the officer is of more than ordinary significance; for if, as the
accused claims, the "jumper" was placed in the cabinet for the first time by Porter there would be no occasion for
any change of demeanor on the part of the accused. We do not think that the officer's declination to wait until
defendant should secure a notary public shows bias. The presence of such an official was neither required nor
authorized by law and the very efficacy of a search depends upon its swiftness.
We must also agree with the prosecuting attorney that the attending circumstances do not strengthen the story
told by the boy; that the latter would have been likely to call out at the time he saw the "jumper" being placed in
the drawer, or at least directed his father's attention to it immediately instead of waiting, as he says, until the latter
was called by the officer. Finally, to accept the boy's story we must believe that this company or its
representatives deliberately conspired not merely to lure the defendant into the commission of a crime but to
fasten upon him a crime which he did not commit and thus convict an innocent man by perjured evidence. This is
a much more serious charge than that contained in the complaint and should be supported by very strong
corroborating circumstances which we do not find here. We are, accordingly, unable to consider as satisfactory
defendant's explanation of the "jumper's" presence.
The only alternative is the conclusion that the "jumper" was placed there by the accused or by some one acting
for him and that it was the instrument by which the current was deflected from the matter Exhibit B and the Light
Company deprived of its lawful compensation.
After a careful examination of the entire record we are satisfied beyond peradventure of a doubt that the proofs presented
fully support the facts as set forth in the foregoing finding.
Counsel for the appellant insists that the only corporeal property can be the subject of the crime of larceny, and in the
support of this proposition cites several authorities for the purpose of showing that the only subjects of larceny are
tangible, movable, chattels, something which could be taken in possession and carried away, and which had some,
although trifling, intrinsic value, and also to show that electricity is an unknown force and can not be a subject of larceny.
In the U. S. vs. Genato (15 Phi. Rep., 170) the defendant, the owner of the store situated at No. 154 Escolta, Manila, was
using a contrivance known as a "jumper" on the electric meter installed by the Manila Electric Railroad and the Light
Company. As a result of the use of this "jumper" the meter, instead of making one revolution in every four seconds,
registered one in seventy-seven seconds, thereby reducing the current approximately 95 per cent. Genato was charged in
the municipal court with a violation of a certain ordinance of the city of Manila, and was sentenced to pay a fine of P200.
He appealed to the Court of First Instance, was again tried and sentenced to pay the same fine. An appeal was taken
from the judgment of the Court of First Instance to the Supreme Court on the ground that the ordinance in question was
null and void. It is true that the only question directly presented was of the validity of the city ordinance. The court, after
holding that said ordinance was valid, said:

Even without them (ordinances), the right of ownership of electric current is secured by articles 517 and 518 of the
Penal Code; the application of these articles in case of subtraction of gas, a fluid used for lighting, and in some
respects resembling electricity, is confirmed by the rule laid down in the decisions of the supreme court of Spain
January 20, 1887, and April 1, 1897, construing and enforcing the provisions of articles 530 and 531 of the penal
code of that country, articles identical with articles 517 and 518 of the code in force in these Islands.
Article 517 of the Penal Code above referred to reads as follows:
The following are guilty of larceny:
(1) Those who with intent of gain and without violence or intimidation against the person, or force against things,
shall take another's personal property without the owner's consent.
And article 518 fixes the penalty for larceny in proportion to the value of the personal property stolen.
It is true that electricity is no longer, as formerly, regarded by electricians as a fluid, but its manifestation and effects, like
those of gas, may be seen and felt. The true test of what is a proper subject of larceny seems to be not whether the
subject is corporeal, but whether it is capable of appropriation by another than the owner.
It is well-settled that illuminating gas may be the subject of larceny, even in the absence of a statute so providing.
(Decisions of supreme court of Spain, January 20, 1887, and April 1, 1897, supra; also (England) Queen vs. Firth, L. R. 1
C. C., 172, 11 Cox C. C., 234; Queen vs. White, 3 C. & K., 363, 6 Cox C. C., 213; Woods vs. People, 222 III., 293, 7 L. R.
A., 520; Commonwealth vs. Shaw, 4 Allen (Mass), 308; State vs. Wellman, 34 Minn., 221, N. W. Rep., 385, and 25 Cyc.,
p. 12, note 10.)
In the case of Commonwealth vs. Shaw, supra, the court, speaking through Chief Justice Bigelow, said:
There is nothing in the nature of gas used for illuminating purposes which renders it incapable of being feloniously
taken and carried away. It is a valuable article of merchandise, bought and sold like other personal property,
susceptible of being severed from a mass or larger quantity, and of being transported from place to place. In the
present case it appears that it was the property of the Boston Gas Light Company; that it was in their possession
by being confined in conduits and tubes which belonged to them, and that the defendant severed a portion of that
which was in the pipes of the company by taking it into her house and there consuming it. All this being proved to
have been done by her secretly and with intent to deprive the company of their property and to appropriate it to
her own use, clearly constitutes the crime of larceny.
Electricity, the same as gas, is a valuable article of merchandise, bought and sold like other personal property and is
capable of appropriation by another. So no error was committed by the trial court in holding that electricity is a subject of
larceny.
It is urged in support of the fourth assignment of error that if it be true that the appellant did appropriate to his own use the
electricity as charged he can not be held guilty of larceny for any part of the electricity thus appropriated, after the first
month, for the reason that the complaining party, the Manila Electric Road and Light Company, knew of this
misappropriation and consented thereto.
The outside meter was installed on March 15, 1909, and read 218 kilowatt hours. On the same day the inside meter was
read and showed 745 kilowatt hours. Both meters were again read on March 3, 1910, and the outside one showed 2,718
kilowatt hours while the one on the inside only showed 968, the difference in consumption during this time being 2,277
kilowatt hours. The taking of this current continued over a period of one year, less twelve days. Assuming that the
company read both meters at the end of each month; that it knew the defendant was misappropriating the current to that
extent; and that t continued to furnish the current, thereby giving the defendant an opportunity to continue the
misppropriation, still, we think, that the defendant is criminally responsible for the taking of the whole amount, 2,277
kilowatt hours. The company had a contract with the defendant to furnish him with current for lighting purposes. It could
not stop the misappropriation without cutting off the current entirely. It could not reduce the current so as to just furnish
sufficient for the lighting of two, three, or five lights, as claimed by the defendant that he used during the most of this time,
but the current must always be sufficiently strong to furnish current for the thirty lights, at any time the defendant desired
to use them.
There is no pretense that the accused was solicited by the company or any one else to commit the acts charged. At most
there was a mere passive submission on the part of the company that the current should be taken and no indication that it

wished it to be taken, and no knowledge by the defendant that the company wished him to take the current, and no mutual
understanding between the company and the defendant, and no measures of inducement of any kind were employed by
the company for the purpose of leading the defendant into temptation, and no preconcert whatever between him and
company. The original design to misappropriate this current was formed by the defendant absolutely independent of any
acts on the part of the company or its agents. It is true, no doubt, as a general proposition, that larceny is not committed
when the property is taken with the consent of its owner. It may be difficult in some instances to determine whether certain
acts constitute, in law, such "consent." But under the facts in the case at bar it is not difficult to reach a conclusion that the
acts performed by the plaintiff company did not constitute a consent on its part the defendant take its property. We have
been unable to find a well considered case holding contrary opinion under similar facts, but, there are numerous cases
holding that such acts do not constitute such consent as would relieve the taker of criminal responsibility. The fourth
assignment of error is, therefore, not well founded.
It is also contended that since the "jumper" was not used continuously, the defendant committed not a single offense but a
series of offenses. It is, no doubt, true that the defendant did not allow the "jumper" to remain in place continuously for any
number of days as the company inspected monthly the inside meter. So the "jumper" was put on and taken off at least
monthly, if not daily, in order to avoid detection, and while the "jumper" was off the defendant was not misappropriating
the current. The complaint alleged that the defendant did on, during, and between the 13th day of February, 1909, and the
3d of March, 1910. willfully, unlawfully, and feloniously take, steal, and carry away 2,277 kilowatts of electric current of the
value of P909. No demurrer was presented against this complaint on the ground that more than one crime was charged.
The Government had no opportunity to amend or correct this error, if error at all. In the case of U. S. vs. Macaspac (12
Phil. Rep., 26), the defendant received from one Joquina Punu the sum of P31.50, with the request to deliver it to
Marcelina Dy-Oco. The defendant called upon Marcelina, but instead of delivering the said amount she asked Marcelina
for P30 in the name of Joaquina who had in no way authorized her to do so. Marcelina gave her P30, believing that
Joaquina had sent for it. Counsel for the defendant insisted that the complaint charged his client with two different crimes
ofestafa in violation of section 11 of General Orders, No. 58. In disposing of this question this court said:
The said defect constitutes one of the dilatory pleas indicated by section 21, and the accused ought to have
raised the point before the trial began. Had this been done, the complaint might have been amended in time,
because it is merely a defect of form easily remedied. . . . Inasmuch as in the first instance the accused did not
make the corresponding dilatory plea to the irregularity of the complaint, it must be understood that has waived
such objection, and is not now entitled to raise for the first time any question in reference thereto when submitting
to this court her assignment of errors. Apart from the fact that the defense does not pretend that any of the
essential rights of the accused have been injured, the allegation of the defect above alluded to, which in any case
would only affect form of the complaint, can not justify a reversal of the judgment appealed from, according to the
provisions of section 10 of General Orders, No. 58.
In the case at bar it is not pointed out wherein any of the essential rights of the defendant have been prejudiced by reason
of the fact that the complaint covered the entire period. If twelve distinct and separate complaints had been filed against
the defendant, one for each month, the sum total of the penalties imposed might have been very much greater than that
imposed by the court in this case. The covering of the entire period by one charge has been beneficial, if anything, and
not prejudicial to the rights of the defendant. The prosecuting attorney elected to cover the entire period with one charge
and the accused having been convicted for this offense, he can not again be prosecuted for the stealing of the current at
any time within that period. Then, again, we are of the opinion that the charge was properly laid. The electricity was stolen
from the same person, in the same manner, and in the same place. It was substantially one continuous act, although the
"jumper" might have been removed and replaced daily or monthly. The defendant was moved by one impulse to
appropriate to his own use the current, and the means adopted by him for the taking of the current were in the execution
of a general fraudulent plan.
A person stole gas for the use of a manufactory by means of pipe, which drew off the gas from the main without
allowing it to pass through the meter. The gas from this pipe was burnt every day, and turned off at night. The
pipe was never closed at this junction with the main, and consequently always remained full of gas. It was held,
that if the pipe always remained full, there was, in fact, a continuous taking of the gas and not a series of separate
talkings. It was held also that even if the pipe had not been kept full, the taking would have been continuous, as it
was substantially all one transaction. (Regina vs. Firth, L. R., 1 C. C., 172; 11 Cox C. C., 234. Cited on p. 758 of
Wharton's Criminal Law, vol. 1, 10th ed.)
The value of the electricity taken by the defendant was found by the trial court to be P865.26. This finding is fully in
accordance with the evidence presented. So no error was committed in sentencing the defendant to indemnify the
company in this amount, or to suffer the corresponding subsidiary imprisonment in case of insolvency. The judgment
being strictly in accordance with the law and the merits of the case, same is hereby affirmed, with costs against the
appellant.

19. 449 SCRA 352

NIMFA USERO vs. COURT OF APPEALS and SPS. HERMINIGILDO & CECILIA POLINAR (G.R. No. 152115, January
26, 2005)
x--------------------------------x
LUTGARDA R. SAMELA vs. COURT OF APPEALS and SPS. HERMINIGILDO & CECILIA POLINAR (G.R. No.
155055, January 26, 2005)
Before this Court are two consolidated petitions for review on certiorari under Rule 45 of the Rules of Court. The first
petition, docketed as G.R. No. 152115, filed by Nimfa Usero, assails the September 19, 2001 decision 1 of the Court of
Appeals in CA-GR SP No. 64718. The second petition, docketed as G.R. No. 155055, filed by Lutgarda R. Samela,
assails the January 11, 2002 decision2 of the Court of Appeals in CA-GR SP NO. 64181.
The undisputed facts follow.
Petitioners Lutgarda R. Samela and Nimfa Usero are the owners respectively of lots 1 and 2, Block 5, Golden Acres
Subdivision, Barrio Almanza, Las Pias City.
Private respondent spouses Polinar are the registered owners of a parcel of land at no. 18 Anahaw St., Pilar Village, Las
Pias City, behind the lots of petitioners Samela and Usero.
Situated between the lots of the parties is a low-level strip of land, with a stagnant body of water filled with floating water
lilies; abutting and perpendicular to the lot of petitioner Samela, the lot of the Polinars and the low-level strip of land is the
perimeter wall of Pilar Village Subdivision.
Apparently, every time a storm or heavy rains occur, the water in said strip of land rises and the strong current passing
through it causes considerable damage to the house of respondent Polinars. Frustrated by their predicament, private
respondent spouses, on July 30, 1998, erected a concrete wall on the bank of the low-level strip of land about three
meters from their house and rip-rapped the soil on that portion of the strip of land.
Claiming ownership of the subject strip of land, petitioners Samela and Usero demanded that the spouses Apolinar stop
their construction but the spouses paid no heed, believing the strip to be part of a creek. Nevertheless, for the sake of
peace, the Polinars offered to pay for the land being claimed by petitioners Samela and Usero. However, the parties failed
to settle their differences.
On November 9, 1998, petitioners filed separate complaints for forcible entry against the Polinars at the Metropolitan Trial
Court of Las Pias City. The case filed by petitioner Samela was docketed as Civil Case No. 5242, while that of petitioner
Usero was docketed as Civil Case No. 5243.
In Civil Case No. 5242, petitioner Samela adduced in evidence a copy of her Transfer Certificate of Title, plan of
consolidation, subdivision survey, the tax declaration in her name, and affidavits of petitioner Usero and a certain Justino
Gamela whose property was located beside the perimeter wall of Pilar Village.
The spouses Polinar, on the other hand, presented in evidence their own TCT; a barangay certification as to the existence
of the creek; a certification from the district engineer that the western portion of Pilar Village is bound by a tributary of
Talon Creek throughout its entire length; boundary and index map of Pilar Village showing that the village is surrounded
by a creek and that the Polinar property is situated at the edge of said creek; and pictures of the subject strip of land filled
with water lilies.
On March 22, 1999, the trial court rendered a decision in favor of petitioner Samela:
WHEREFORE, the Court hereby renders judgment ordering the defendants to vacate and remove at their expense the
improvements made on the subject lot; ordering the defendants to pay the plaintiff P1,000.00 a month as reasonable
compensation for the use of the portion encroached from the filing of the complaint until the same is finally vacated; and to
pay plaintiff P10,000.00 as reasonable attorneys fees plus costs of suit.31vvphi1.nt

In a parallel development, the Metropolitan Trial Court, in Civil Case No. 5243, issued an order on February 29, 2000,
directing petitioner Usero and the Polinar spouses to commission a professional geodetic engineer to conduct a relocation
survey and to submit the report to the trial court.
On April 24, 2000, Mariano Flotilde, a licensed geodetic engineer, conducted a relocation survey of Useros property
covered by TCT No. T- 29545. The result of the said relocation survey, as stated in his affidavit, was as follows:
1. That I executed a relocation survey of Lot 2, Block 5, (LRC) PCS-4463 covered by TCT No. T-29545 registered
in the name of Nimfa O. Usero;
2. That according to my survey, I found out that there is no existing creek on the boundary of the said lot;
3. That based on the relocation plan surveyed by the undersigned, attached herewith, appearing is the
encroachment on the above-mentioned lot by Spouses Herminigildo and Cecilia Polinar with an area of FORTY
THREE (43) SQUARE METERS;
4. That this affidavit was made in compliance with Court Order dated February 23, 2000 of Metropolitan Trial
Court, Las Pias City, Branch LXXIX.4
On August 25, 2000, the Metropolitan Trial Court decided in favor of petitioner Usero:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants ordering them:
a) To vacate and remove at their expense the improvement made on the subject lot;
b) To pay the plaintiff P1,000.00 a month as reasonable compensation for the portion encroached from the time of
the filing of the complaint until the same is finally vacated;
c) To pay plaintiff P10,000.00 as reasonable attorneys fees plus costs of suit.
SO ORDERED.5
The Polinar spouses appealed the decisions of the two Municipal Trial Courts to the Regional Trial Court of Las Pias,
Branch 253 which heard the appeals separately.
On December 20, 2000, the Regional Trial Court, deciding Civil Case No. 5242, reversed the decision of the trial court
and ordered the dismissal of the complaint. It confirmed the existence of the creek between the northwestern portion of
the lot of petitioner Samela and the southwestern portion of the lot of the spouses Polinar:
Finding the existence of a creek between the respective properties of the parties, plaintiff-appellee cannot therefore lay
claim of lawful ownership of that portion because the same forms part of public dominion.1a\^/phi1.netConsequently, she
cannot legally stop the defendants-appellants from rip-rapping the bank of the creek to protect the latters property from
soil erosion thereby avoiding danger to their lives and damage to property.
Absent a lawful claim by the plaintiff-appellee over the subject portion of that lot, defendants-appellants are not duty
bound to pay the former compensation for the use of the same. As a result, they may maintain the said improvements
introduced thereon subject to existing laws, rules and regulations and/or ordinances appurtenant thereto.
WHEREFORE, premises considered, the Decision rendered by Branch 79 of the Metropolitan Trial Court, Las Pias is
REVERSED. Accordingly, the instant complaint is DISMISSED.
SO ORDERED.6
On March 16, 2001, the Regional Trial Court, in Civil Case No. 5243, also reversed the finding of the Municipal Trial
Court:

From the foregoing, defendants-appellants may maintain the improvements introduced on the subject portion of the lot
subject to existing laws, rules and regulations and/or ordinances pertaining thereto. Consequently, no compensation may
be awarded in favor of the plaintiff-appellee.
WHEREFORE, premises considered, the above-mentioned Decision rendered by Branch 79 of the Las Pias City
Metropolitan Trial Court is REVERSED. Accordingly, the instant complaint is DISMISSED.
From the adverse decisions of the Regional Trial Court, petitioners filed their respective petitions for review oncertiorari to
the Court of Appeals. Petitioner Samelas case was docketed as CA-G.R. SP 64181 while that of petitioner Usero was
docketed as CA-G.R. SP 64718.1awphi1.nt
Both petitions failed in the CA. Thus the instant consolidated petitions.
The pivotal issue in the case at bar is whether or not the disputed strip of land, allegedly encroached upon by the spouses
Polinar, is the private property of petitioners or part of the creek and therefore part of the public domain. Clearly this an
issue which calls for a review of facts already determined by the Court of Appeals.
The jurisdiction of the Court in petitions for review on certiorari under Rule 45 of the Rules of Court is limited to reviewing
only errors of law, not of fact, unless the factual findings complained of are devoid of support by the evidence on record or
the assailed judgment is based on a misapprehension of facts.7 This is obviously not the case here.
A careful scrutiny of the records reveals that the assailed decisions are founded on sufficient evidence. That the subject
strip of land is a creek is evidenced by: (1) a barangay certification that a creek exists in the disputed strip of land; (2) a
certification from the Second Manila Engineering District, NCR-DPWH, that the western portion of Pilar Village where the
subject strip of land is located is bounded by a tributary of Talon Creek and (3) photographs showing the abundance of
water lilies in the subject strip of land. The Court of Appeals was correct: the fact that water lilies thrive in that strip of land
can only mean that there is a permanent stream of water or creek there.
In contrast, petitioners failed to present proof sufficient to support their claim. Petitioners presented the TCTs of their
respective lots to prove that there is no creek between their properties and that of the Polinars. However, an examination
of said TCTs reveals that the descriptions thereon are incomplete. In petitioner Samelas TCT No. T-30088, there is no
boundary description relative to the northwest portion of the property pertaining to the site of the creek. Likewise in TCT
No. T-22329-A of the spouses Polinar, the southeast portion which pertains to the site of the creek has no described
boundary. Moreover the tax declaration presented by petitioner is devoid of any entry on the "west boundary" vis-a-vis the
location of the creek. All the pieces of evidence taken together, we can only conclude that the adjoining portion of these
boundaries is in fact a creek and belongs to no one but the state.
Property is either of public dominion or of private ownership.8 Concomitantly, Article 420 of the Civil Code provides:
ART. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State,
banks, shores, roadsteads, and others of similar character;
The phrase "others of similar character" includes a creek which is a recess or an arm of a river. It is property belonging to
the public domain which is not susceptible to private ownership.9 Being public water, a creek cannot be registered under
the Torrens System in the name of any individual10 .
Accordingly, the Polinar spouses may utilize the rip-rapped portion of the creek to prevent the erosion of their property.
WHEREFORE, the consolidated petitions are hereby denied. The assailed decisions of the Court of Appeals in CA-G.R.
SP 64181 and CA-G.R. SP 64718 are affirmed in toto.
SO ORDERED.

20. 193 SCRA 374

SIMPLICIO BINALAY, PONCIANO GANNABAN, NICANOR MACUTAY, DOMINGO ROSALES, GREGORIO
ARGONZA, EUSTAQUIO BAUA, FLORENTINO ROSALES, TEODORO MABBORANG, PATRICIO MABBORANG and
FULGENCIO MORA
vs.
GUILLERMO MANALO and COURT OF APPEALS (G.R. No. 92161, March 18, 1991)
The late Judge Taccad originally owned a parcel of land situated in Tumauini, Isabela having an estimated area of twenty
(20) hectares. The western portion of this land bordering on the Cagayan River has an elevation lower than that of the
eastern portion which borders on the national road. Through the years, the western portion would periodically go under
the waters of the Cagayan River as those waters swelled with the coming of the rains. The submerged portion, however,
would re-appear during the dry season from January to August. It would remain under water for the rest of the year, that
is, from September to December during the rainy season.
The ownership of the landholding eventually moved from one person to another. On 9 May 1959, respondent Guillermo
Manalo acquired 8.65 hectares thereof from Faustina Taccad, daughter of Judge Juan Taccad. The land sold was
described in the Deed of Absolute Sale 1 as follows:
. . . a parcel of agricultural land in Balug, Tumauini, Isabela, containing an area of 8.6500 hectares, more or less;
bounded on the North by Francisco Forto on the East by National Road; on South by Julian Tumolva and on the
West by Cagayan River; declared for taxation under Tax Declaration No. 12681 in the name of Faustina Taccad,
and assessed at P 750.00. . . .
Later in 1964, respondent Manalo purchased another 1.80 hectares from Gregorio Taguba who had earlier acquired the
same from Judge Juan Taccad. The second purchase brought the total acquisition of respondent Manalo to 10.45
hectares. The second piece of property was more particularly described as follows:
. . . a piece of agricultural land consisting of tobacco land, and containing an area of 18,000 square meters, more
or less, bounded on the North by Balug Creek; on the South, by Faustina Taccad (now Guillermo R. Manalo); on
the East, by a Provincial Road; and on the West, by Cagayan River assessed at P 440.00, as tax Declaration No.
3152. . . . 2
During the cadastral survey conducted at Balug, Tumauini, Isabela on 21 October 1969, the two (2) parcels of land
belonging to respondent Manalo were surveyed and consolidated into one lot, designated as Lot No. 307, Pls-964. Lot
307 which contains 4.6489 hectares includes: (a) the whole of the 1.80 hectares acquired from Gregorio Taguba; and (b)
2.8489 hectares out of the 8.65 hectares purchased from Faustina Taccad. As the survey was conducted on a rainy
month, a portion of the land bought from Faustina Taccad then under water was left unsurveyed and was not included in
Lot 307.
The Sketch Plan 3 submitted during the trial of this case and which was identified by respondent Manalo shows that the
Cagayan River running from south to north, forks at a certain point to form two (2) branchesthe western and the eastern
branchesand then unites at the other end, further north, to form a narrow strip of land. The eastern branch of the river
cuts through the land of respondent Manalo and is inundated with water only during the rainy season. The bed of the
eastern branch is the submerged or the unsurveyed portion of the land belonging to respondent Manalo. For about eight
(8) months of the year when the level of water at the point where the Cagayan River forks is at its ordinary depth, river
water does not flow into the eastern branch. While this condition persists, the eastern bed is dry and is susceptible to
cultivation.
Considering that water flowed through the eastern branch of the Cagayan River when the cadastral survey was
conducted, the elongated strip of land formed by the western and the eastern branches of the Cagayan River looked very
much like an island. This strip of land was surveyed on 12 December 1969. 4
It was found to have a total area of 22.7209 hectares and was designated as Lot 821 and Lot 822. The area of Lot 822 is
10.8122 hectares while Lot 821 has an area of 11.9087 hectares. Lot 821 is located directly opposite Lot 307 and is
separated from the latter only by the eastern branch of the Cagayan River during the rainy season and, during the dry
season, by the exposed, dry river bed, being a portion of the land bought from Faustina Taccad. Respondent Manalo
claims that Lot 821 also belongs to him by way of accretion to the submerged portion of the property to which it is
adjacent.

Petitioners who are in possession of Lot 821, upon the other hand, insist that they own Lot 821. They occupy the outer
edges of Lot 821 along the river banks, i.e., the fertile portions on which they plant tobacco and other agricultural
products. They also cultivate the western strip of the unsurveyed portion during summer. 5 This situation compelled
respondent Manalo to file a case for forcible entry against petitioners on 20 May 1969. The case was dismissed by the
Municipal Court of Tumauini, Isabela for failure of both parties to appear. On 15 December 1972, respondent Manalo
again filed a case for forcible entry against petitioners. The latter case was similarly dismissed for lack of jurisdiction by
the Municipal Court of Tumauini, Isabela.
On 24 July 1974, respondent Manalo filed a complaints 6 before the then Court of First Instance of Isabela, Branch 3 for
quieting of title, possession and damages against petitioners. He alleged ownership of the two (2) parcels of land he
bought separately from Faustina Taccad and Gregorio Taguba for which reason he prayed that judgment be entered
ordering petitioners to vacate the western strip of the unsurveyed portion. Respondent Manalo likewise prayed that
judgment be entered declaring him as owner of Lot 821 on which he had laid his claim during the survey.
Petitioners filed their answer denying the material allegations of the complaint. The case was then set for trial for failure of
the parties to reach an amicable agreement or to enter into a stipulation of facts. 7 On 10 November 1982, the trial court
rendered a decision with the following dispositive portion:
WHEREFORE, in the light of the foregoing premises, the Court renders judgment against the defendants and in
favor of the plaintiff and orders:
1. That plaintiff, Guillermo Manalo, is declared the lawful owner of the land in question, Lot No. 821, Pls-964 of
Tumauini Cadastre, and which is more particularly described in paragraph 2-b of the Complaint;
2. That the defendants are hereby ordered to vacate the premises of the land in question, Lot No. 821, Pls-964 of
Tumauini Cadastre, and which is more particularly described in paragraph 2-b of the Complaint;
3. That the defendants are being restrained from entering the premises of the land in question, Lot No. 821, Pls964 of Tumauini Cadastre, and which is more particularly described in paragraph 2-b of the Complaint; and
4. That there is no pronouncement as to attorney's fees and costs.
SO ORDERED. 8
Petitioners appealed to the Court of Appeals which, however, affirmed the decision of the trial court. They filed a motion
for reconsideration, without success.
While petitioners insist that Lot 821 is part of an island surrounded by the two (2) branches of the Cagayan River, the
Court of Appeals found otherwise. The Court of Appeals concurred with the finding of the trial court that Lot 821 cannot be
considered separate and distinct from Lot 307 since the eastern branch of the Cagayan River substantially dries up for the
most part of the year such that when this happens, Lot 821 becomes physically (i.e., by land) connected with the dried up
bed owned by respondent Manalo. Both courts below in effect rejected the assertion of petitioners that the depression on
the earth's surface which separates Lot 307 and Lot 821 is, during part of the year, the bed of the eastern branch of the
Cagayan River.
It is a familiar rule that the findings of facts of the trial court are entitled to great respect, and that they carry even more
weight when affirmed by the Court of Appeals. 9 This is in recognition of the peculiar advantage on the part of the trial
court of being able to observe first-hand the deportment of the witnesses while testifying. Jurisprudence is likewise settled
that the Court of Appeals is the final arbiter of questions of fact. 10 But whether a conclusion drawn from such findings of
facts is correct, is a question of law cognizable by this Court. 11
In the instant case, the conclusion reached by both courts below apparently collides with their findings that periodically at
the onset of and during the rainy season, river water flows through the eastern bed of the Cagayan River. The trial court
held:
The Court believes that the land in controversy is of the nature and character of alluvion (Accretion), for it appears
that during the dry season, the body of water separating the same land in controversy (Lot No. 821, Pls-964) and
the two (2) parcels of land which the plaintiff purchased from Gregorio Taguba and Justina Taccad Cayaba
becomes a marshy land and is only six (6) inches deep and twelve (12) meters in width at its widest in the

northern tip (Exhs. "W", "W-l", "W-2", "W-3" and "W-4"), It has been held by our Supreme Court that "the owner of
the riparian land which receives the gradual deposits of alluvion, does not have to make an express act of
possession. The law does not require it, and the deposit created by the current of the water becomes manifest"
(Roxas vs. Tuazon, 6 Phil. 408). 12
The Court of Appeals adhered substantially to the conclusion reached by the trial court, thus:
As found by the trial court, the disputed property is not an island in the strict sense of the word since the eastern
portion of the said property claimed by appellants to be part of the Cagayan River dries up during summer.
Admittedly, it is the action of the heavy rains which comes during rainy season especially from September to
November which increases the water level of the Cagayan river. As the river becomes swollen due to heavy rains,
the lower portion of the said strip of land located at its southernmost point would be inundated with water. This is
where the water of the Cagayan river gains its entry. Consequently, if the water level is high the whole strip of
land would be under water.
In Government of the Philippine Islands vs. Colegio de San Jose, it was held that
According to the foregoing definition of the words "ordinary" and "extra-ordinary," the highest depth of the waters
of Laguna de Bay during the dry season is the ordinary one, and the highest depth they attain during the extraordinary one (sic); inasmuch as the former is the one which is regular, common, natural, which occurs always or
most of the time during the year, while the latter is uncommon, transcends the general rule, order and measure,
and goes beyond that which is the ordinary depth. If according to the definition given by Article 74 of the Law of
Waters quoted above, the natural bed or basin of the lakes is the ground covered by their waters when at their
highest ordinary depth, the natural bed or basin of Laguna de Bay is the ground covered by its waters when at
their highest depth during the dry season, that is up to the northeastern boundary of the two parcels of land in
question.
We find the foregoing ruling to be analogous to the case at bar. The highest ordinary level of the waters of the Cagayan
River is that attained during the dry season which is confined only on the west side of Lot [821] and Lot [822]. This is the
natural Cagayan river itself. The small residual of water between Lot [821] and 307 is part of the small stream already in
existence when the whole of the late Judge Juan Taccad's property was still susceptible to cultivation and uneroded. 13
The Court is unable to agree with the Court of Appeals that Government of the Philippine Islands vs. Colegio de San
Jose 14 is applicable to the present case. That case involved Laguna de Bay; since Laguna de Bay is a lake, the Court
applied the legal provisions governing the ownership and use of lakes and their beds and shores, in order to determine
the character and ownership of the disputed property. Specifically, the Court applied the definition of the natural bed or
basin of lakes found in Article 74 of the Law of Waters of 3 August 1866. Upon the other hand, what is involved in the
instant case is the eastern bed of the Cagayan River.
We believe and so hold that Article 70 of the Law of Waters of 3 August 1866 is the law applicable to the case at bar:
Art. 70. The natural bed or channel of a creek or river is the ground covered by its waters during the highest
floods. (Emphasis supplied)
We note that Article 70 defines the natural bed or channel of a creek or river as the ground covered by its waters during
the highest floods. The highest floods in the eastern branch of the Cagayan River occur with the annual coming of the
rains as the river waters in their onward course cover the entire depressed portion. Though the eastern bed substantially
dries up for the most part of the year (i.e., from January to August), we cannot ignore the periodical swelling of the waters
( i.e., from September to December) causing the eastern bed to be covered with flowing river waters.
The conclusion of this Court that the depressed portion is a river bed rests upon evidence of record.1wphi1 Firstly,
respondent Manalo admitted in open court that the entire area he bought from Gregorio Taguba was included in Lot
307. 15 If the 1.80 hectares purchased from Gregorio Taguba was included in Lot 307, then the Cagayan River referred to
as the western boundary in the Deed of Sale transferring the land from Gregorio Taguba to respondent Manalo as well as
the Deed of Sale signed by Faustina Taccad, must refer to the dried up bed (during the dry months) or the eastern branch
of the river (during the rainy months). In the Sketch Plan attached to the records of the case, Lot 307 is separated from
the western branch of the Cagayan River by a large tract of land which includes not only Lot 821 but also what this Court
characterizes as the eastern branch of the Cagayan River.

Secondly, the pictures identified by respondent Manalo during his direct examination depict the depressed portion as a
river bed. The pictures, marked as Exhibits "W" to "W-4", were taken in July 1973 or at a time when the eastern bed
becomes visible. 16 Thus, Exhibit "W-2" which according to respondent Manalo was taken facing the east and Exhibit "W3" which was taken facing the west both show that the visible, dried up portion has a markedly lower elevation than Lot
307 and Lot 821. It has dike-like slopes on both sides connecting it to Lot 307 and Lot 821 that are vertical upward and
very prominent. This topographic feature is compatible with the fact that a huge volume of water passes through the
eastern bed regularly during the rainy season. In addition, petitioner Ponciano Gannaban testified that one had to go
down what he called a "cliff" from the surveyed portion of the land of respondent Manalo to the depressed portion. The
cliff, as related by petitioner Gannaban, has a height of eight (8) meters. 17
The records do not show when the Cagayan River began to carve its eastern channel on the surface of the earth.
However, Exhibit "E" 18 for the prosecution which was the Declaration of Real Property standing in the name of Faustina
Taccad indicates that the eastern bed already existed even before the sale to respondent Manalo. The words "old bed"
enclosed in parenthesesperhaps written to make legitimate the claim of private ownership over the submerged
portionis an implied admission of the existence of the river bed. In the Declaration of Real Property made by respondent
Manalo, the depressed portion assumed the name Rio Muerte de Cagayan. Indeed, the steep dike-like slopes on either
side of the eastern bed could have been formed only after a prolonged period of time.
Now, then, pursuant to Article 420 of the Civil Code, respondent Manalo did not acquire private ownership of the bed of
the eastern branch of the river even if it was included in the deeds of absolute sale executed by Gregorio Taguba and
Faustina Taccad in his favor. These vendors could not have validly sold land that constituted property of public dominion.
Article 420 of the Civil Code states:
The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the
State, banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and are intended for some public service or for
the development of the national wealth. (Emphasis supplied)
Although Article 420 speaks only of rivers and banks, "rivers" is a composite term which includes: (1) the running waters,
(2) the bed, and (3) the banks. 19 Manresa, in commenting upon Article 339 of the Spanish Civil Code of 1889 from which
Article 420 of the Philippine Civil Code was taken, stressed the public ownership of river beds:
La naturaleza especial de los rios, en punto a su disfrute general, hace que sea necesario considerar en su
relacion de dominio algo mas que sus aguas corrientes. En efecto en todo rio es preciso distinguir 1. esta agua
corriente; 2. el alveo o cauce, y 3. las riberas. Ahora bien: son estas dos ultimas cosas siempre de dominio
publico, como las aguas?
Realmente no puede imaginarse un rio sin alveo y sin ribera; de suerte que al decir el Codigo civil que los rios
son de dominio publico, parece que debe ir implicito el dominio publico de aquellos tres elementos que integran
el rio. Por otra parte, en cuanto a los alveos o cauces tenemos la declaracion del art. 407, num 1, donde
dice: son de dominion publico . . . los rios y sus cauces naturales; declaracion que concuerda con lo que dispone
el art. 34 de la ley de [Aguas], segun el cual, son de dominion publico: 1. los alveos o cauces de los arroyos que
no se hallen comprendidos en el art. 33, y 2. los alveos o cauces naturales de los riosen la extension que cubran
sus aguas en las mayores crecidas ordinarias. 20 (Emphasis supplied)
The claim of ownership of respondent Manalo over the submerged portion is bereft of basis even if it were alleged and
proved that the Cagayan River first began to encroach on his property after the purchase from Gregorio Taguba and
Faustina Taccad. Article 462 of the Civil Code would then apply divesting, by operation of law, respondent Manalo of
private ownership over the new river bed. The intrusion of the eastern branch of the Cagayan River into his landholding
obviously prejudiced respondent Manalo but this is a common occurrence since estates bordering on rivers are exposed
to floods and other evils produced by the destructive force of the waters. That loss is compensated by, inter alia, the right
of accretion acknowledged by Article 457 of the Civil Code. 21 It so happened that instead of increasing the size of Lot
307, the eastern branch of the Cagayan River had carved a channel on it.
We turn next to the issue of accretion. After examining the records of the case, the Court considers that there was no
evidence to prove that Lot 821 is an increment to Lot 307 and the bed of the eastern branch of the river. Accretion as a
mode of acquiring property under Article 457 of the Civil Code requires the concurrence of three (3) requisites: (a) that the

deposition of soil or sediment be gradual and imperceptible; (b) that it be the result of the action of the waters of the river
(or sea); and (c) that the land where accretion takes place is adjacent to the banks of rivers (or the sea coast). 22 The
Court notes that the parcels of land bought by respondent Manalo border on the eastern branch of the Cagayan River.
Any accretion formed by this eastern branch which respondent Manalo may claim must be deposited on or attached to Lot
307. As it is, the claimed accretion (Lot 821) lies on the bank of the river not adjacent to Lot 307 but directly opposite Lot
307 across the river.
Assuming (arguendo only) that the Cagayan River referred to in the Deeds of Sale transferring ownership of the land to
respondent Manalo is the western branch, the decision of the Court of Appeals and of the trial court are bare of factual
findings to the effect that the land purchased by respondent Manalo received alluvium from the action of the aver in a slow
and gradual manner. On the contrary, the decision of the lower court made mention of several floods that caused the land
to reappear making it susceptible to cultivation. A sudden and forceful action like that of flooding is hardly the alluvial
process contemplated under Article 457 of the Civil Code. It is the slow and hardly perceptible accumulation of soil
deposits that the law grants to the riparian owner.
Besides, it is important to note that Lot 821 has an area of 11.91 hectares. Lot 821 is the northern portion of the strip of
land having a total area of 22.72 hectares. We find it difficult to suppose that such a sizable area as Lot 821 resulted from
slow accretion to another lot of almost equal size. The total landholding purchased by respondent Manalo is 10.45
hectares (8.65 hectares from Faustina Taccad and 1.80 hectares from Gregorio Taguba in 1959 and 1964, respectively),
in fact even smaller than Lot 821 which he claims by way of accretion. The cadastral survey showing that Lot 821 has an
area of 11.91 hectares was conducted in 1969. If respondent Manalo's contention were accepted, it would mean that in a
span of only ten (10) years, he had more than doubled his landholding by what the Court of Appeals and the trial court
considered as accretion. As already noted, there are steep vertical dike-like slopes separating the depressed portion or
river bed and Lot 821 and Lot 307. This topography of the land, among other things, precludes a reasonable conclusion
that Lot 821 is an increment to the depressed portion by reason of the slow and constant action of the waters of either the
western or the eastern branches of the Cagayan River.
We turn finally to the issue of ownership of Lot 821. Respondent Manalo's claim over Lot 821 rests on accretion coupled
with alleged prior possession. He alleged that the parcels of land he bought separately from Gregorio Taguba and
Faustina Taccad were formerly owned by Judge Juan Taccad who was in possession thereof through his (Judge
Taccad's) tenants. When ownership was transferred to him, respondent Manalo took over the cultivation of the property
and had it declared for taxation purposes in his name. When petitioners forcibly entered into his property, he twice
instituted the appropriate action before the Municipal Trial Court of Tumauini, Isabela. Against respondent Manalo's
allegation of prior possession, petitioners presented tax declarations standing in their respective names. They claimed
lawful, peaceful and adverse possession of Lot 821 since 1955.
If respondent Manalo had proved prior possession, it was limited physically to Lot 307 and the depressed portion or the
eastern river bed. The testimony of Dominga Malana who was a tenant for Justina Taccad did not indicate that she was
also cultivating Lot 821. In fact, the complaints for forcible entry lodged before the Municipal Trial Court of Tumauini,
Isabela pertained only to Lot 307 and the depressed portion or river bed and not to Lot 821. In the same manner, the tax
declarations presented by petitioners conflict with those of respondent Manalo. Under Article 477 of the Civil Code, the
plaintiff in an action for quieting of title must at least have equitable title to or interest in the real property which is the
subject matter of the action. The evidence of record on this point is less than satisfactory and the Court feels compelled to
refrain from determining the ownership and possession of Lot 821, adjudging neither petitioners nor respondent Manalo
as owner(s) thereof.
WHEREFORE, the Decision and Resolution of the Court of Appeals in CA-GR CV No. 04892 are hereby SET ASIDE.
Respondent Manalo is hereby declared the owner of Lot 307. The regularly submerged portion or the eastern bed of the
Cagayan River is hereby DECLARED to be property of public dominion. The ownership of Lot 821 shall be determined in
an appropriate action that may be instituted by the interested parties inter se. No pronouncement as to costs.
SO ORDERED.

21. 216 SCRA 33

SPOUSES SOCRATES PILAPIL and ROSARIO PILAPIL
vs.
THE COURT OF APPEALS, REGIONAL TRIAL COURT OF CEBU, BRANCH 17, and SPOUSES GORGONIO
COLOMIDA and GLORIA COLOMIDA (G.R. No. 97619 November 26, 1992)
From the denial of 13 February 1991 of their motion for the reconsideration of the 26 October 1990 decision of the Court
of Appeals, in CA-G.R. CV No. 17235, 1 which affirmed the 8 February 1988 decision of Branch 17 of the Regional Trial
Court (RTC) of Cebu, petitioners filed this petition for review under Rule 45 of the Rules of Court.
The kernel issue in this case is whether or not there exists in sitio Bahak, barangay Poblacion, Municipality of Liloan,
Province of Cebu a camino
vecinal; 2 and if so, whether the same traverses the property belonging to the petitioners.
The pleadings disclose the antecedents of this controversy.
The petitioners-spouses (hereinafter, Pilapils) own a 6,598 square meter 3 parcel of land situated in Bahak, Poblacion,
Liloan, Cebu and covered by Tax Declaration No. 15067. 4 The said parcel corresponds to Lot No. 320 and Lot 323 5 and
that portion covered by Plan Psu-07-005007, 6 duly approved by the Regional Director of Region VII of the Bureau of
Lands. The land formerly belonged to Marcelo Pilapil, the grandfather of petitioner Socrates Pilapil.
Private respondents (hereinafter, Colomidas), who are residents of Mandaue City, purchased on 4 June 1981 from Esteria
vda. de Ceniza and the heirs of Leoncio Ceniza a parcel of land, also located at Bahak, Poblacion, Liloan, Cebu, covered
by Tax Declaration No. 19764 and described as follows:
. . . Boundaries: N-Gregorio Longakit; S-Gregorio Longakit; E-Manglar; W-Gregorio Longkit; Area: 10,910
sq. meters; Kind of land: Pasture cocal and wood; Improvements: 20 cocos prod.; Assessed Value:
P1,360.00; Present Possessors: The herein petitioners. 7
This parcel of land, per Plan Psu-07-002763, 8 was found to contain only 6,448 square meters. It is now covered by Free
Patent No. (VII-1)-15448, issued on 23 March 1982, and Original Certificate of Title No. P-20588 9 of the Register of
Deeds of the Province of Cebu issued in the name of the Colomidas and is located around 70 meters from the National
Road. The Colomidas claim that they had acquired from Sesenando Longkit a road right of way which leads towards the
National Road; this road right of way, however, ends at that portion of the property of the Pilapils where a camino
vecinal exists all the way to the said National Road. 10
In the early part of July of 1981, the Colomidas "tried to improve the road of "camino vecinal", for the convenience of the
public," but the Pilapils harassed and threatened them with "bodily harm from making said improvement." The Pilapils also
threatened to fence off the camino vecinal. 11
Thus, on 16 July 1981, the Colomidas filed against the Pilapils a
petition 12 for injunction and damages with a prayer for a writ of preliminary mandatory and/or prohibitory injunction with
the Regional Trial Court of Cebu. Docketed as Civil Case No. R-20732, the petition was raffled off to Branch 17 thereof.
The Colomidas specifically allege in paragraph IV of the petition that:
. . . Granting arguendo, even in the very remote possibility that the "camino vecinal" cannot be proved, the
petitioners are entitled to the use of the same under Articles 649 to 651 of the Civil Code, it being their
only access to public (sic) highway. 13
and pray that upon the filing of the petition, a restraining order be issued directing the Pilapils or anyone acting in their
behalf to cease and desist from preventing or harassing them (Colomidas) from using the camino vecinaland/or fencing
off the same, and after hearing, a writ of preliminary injunction be issued commanding the Pilapils to cease and desist
from proceeding with the acts complained of. They also asked that the injunction be made permanent and that the Pilapils
be ordered to pay, jointly and severally, the sum of P100,000.00 as moral damages, P50,000.00 as exemplary damages,
10,000.00 as attorney's fees and other litigation expenses as may be duly proved. Consistent with the aforequoted
allegation of paragraph IV of the petition, the Colomidas additionally pray that:

6. In the remote possibility that the "camino vecinal" cannot be proved, to consider the same as a right of
way for the petitioners and to fix compensation for the sum (sic) at TEN PESOS (P10.00) per square
meter. 14
On the other hand, on 29 July 1981, the Pilapils filed against the Colomidas an action for damages in the Municipal Circuit
Trial Court (MCTC) of Liloan-Compostela, Cebu which was docketed as Civil Case No. 93-R. 15
On 18 August 1981, the Pilapils filed their Answer 16 in Civil Case No. R-20732. They specifically deny therein the
existence of a "camino vecinal" on their property and allege, inter alia, that the enclosing of their property and allege, inter
alia, that the enclosing of their property by a fence was done in the valid exercise of their right of ownership and that if the
Colomidas were prejudiced thereby, they only have themselves to blame for buying said property without verifying its
condition and existing easements. As affirmative and special defenses, the Pilapils aver that the petition does not state
facts sufficient to constitute a valid cause of action; the Colomidas were the ones who employed threats and intimidation;
and, to add insult to injury, the latter caused a heavy bulldozer to enter their (Pilapils) property and cause great damage to
the plants and crops in the process. The Pilapils also set up a counterclaim for attorney's fees, reimbursement for the
damages caused to their land and moral and exemplary damages as may be determined by the court.
During trial on the merits in Civil Case No. R-20732, the Colomidas presented the following witnesses: Gorgonio
Colomida, Jr. himself, Sesenado Longakit and Florentino Pepito. They also offered in evidence documentary exhibits. the
more relevant and material of which are (1) Resolution No. 106 of the Municipal Council of Liloan passed on 18 August
1973 and entitled "Authorizing the Residents of Bahak, Poblacion, Liloan to Repair and Improve a Camino Vecinal in their
Sitio" 17 and (2) a sketch 18 prepared by witness Sesenando Longakit purportedly showing that the camino
vecinal traverses the property of the Pilapils. Both Longakit and Pepito testified on the said camino vecinal, insisting that it
traverses the property of the Pilapils.
Upon the other hand, the Pilapils presented the following as their witnesses: Roman Sungahid, Engineer Epifanio Jordan
(the Municipal Planning and Development Coordinator of the Municipality of Liloan) and petitioner Socrates Pilapil.
Engineer Jordan testified on Liloan's Urban Land Use Plan 19 or zoning map which he prepared upon the instruction of
then Municipal Mayor Cesar Butai and which was approved by the Sangguniang Bayan of Liloan. Per the said plan,
the camino vecinal in sitio Bahak does not traverse, but runs along the side 20 of the Pilapil property. 21
On 8 February 1988, the trial court rendered its decision
reads:

22

in favor of the Colomidas the dispositive portion of which

WHEREFORE, judgment is hereby rendered in favor of petitioners, and, accordingly, respondents are
permanently enjoined from preventing or harassing petitioners from using the "camino vecinal" across
respondents' land at Bahak, Poblacion, Liloan, or from fencing the same or in any manner preventing its
use by other people; and respondents are ordered to pay petitioners jointly and severally the sum of
P4,500.00 as actual damages, the sum of P5,000.00 as attorney's fees, and the sum of P2,000.00 as
litigation expenses. Costs against respondents.
SO ORDERED. 23
This disposition is based on the following findings of fact and conclusions:
Resolution No. 106 of the Municipal Council of Liloan, passed on August 18, 1973 and entitled
"Authorizing the Residents of Bahak, Poblacion, Liloan to Repair and Improve a Camino Vecina (sic) in
Their Sitio" (Exh. "A") shows that there is a "camino vecinal" at Bahak. It is true, as claimed by
respondents, that Resolution No. 106 does not state that the "camino vecinal" referred to therein
traverses respondents' land; however, the following facts of record support petitioners' theory that the said
"camino vecinal" runs across respondents' land:
1 Resolution No. 106 (Exh. "A") states that upon inspection of the "camino vecinal" by one of the
councilors, it was established that the said "camino vecinal" needed "some improvements to make it
usable," but the Municipal Council did not have the necessary funds for the purpose, and that "the
residents of Bahak, headed by Mr. Sesenando Longakit, have signified to (sic) repair the camino vecinal
on voluntary (sic) basis," hence (sic) it was resolved "to authorize the residents of Bahak to repair
aforesaid road" provided the labor would be on a purely voluntary basis, the municipal government would
not be liable for any expense, and there would be no discrimination in the use of the road.

The "Mr. Sesenando Longkit" alluded to in Resolution No. 106 as heading the residents of Bahak who
had asked for authority to repair the "camino vecinal" at Bahak took the witness stand. His testimony has
established that he has been residing at Bahak since birth on July 16, 1933, that he is the occupant of a
lot (Exh. "B-5") not far from petitioners' lot, and that he and other residents in that area have been using
the "camino vecinal" as their access to the National Road.
It appears from the sketch (Exh. "B") drawn by Mr. Longakit that the "camino vecinal" traverses the land
of respondents (Exhs. "B-6 & "B-7"). Obviously, the "camino vecinal" subject matter of Resolution No. 106
is the "camino vecinal" running across respondents' land, somewhere at the back of which is the land
occupied by Mr. Longakit, who for the reason that he and other residents were using that "camino vecinal"
offered to the municipal government their services to improve it.
2. As testified to by Mr. Longakit, who has been living at Sitio Bahak since 1933, and whose testimony the
Court finds credible, both sides of the "camino vecinal" formerly belonged to the grandfather of
respondent Socrates Pilapil, it was that "camino vecinal" in connection with which he secured Resolution
No. 106, and that before it was partly fenced by respondents, and when he was a child, everybody could
use that "camino vecinal" and carabao carts could pass through it, and, later, 4-wheeled motor vehicles
could pass through it.
3. Mr. Florentino Pepito, 79 years of age when he took the witness stand in 1982, and who was a
councilor in Liloan from 1955 to 1967, and was chairman of the Committee on Roads & Bridges, testified
that the former owner of the lots now owned by respondents at Bahak was Marcelo Pilapil, grandfather of
respondent Socrates Pilapil and close (sic) friend of his (witness Pepito) that the subject "camino vecinal"'
is located between those lots, and fact he has a parcel of land in that area covered by Tax Declaration
No. 36168 (Exh. "E:"), which shows that on the North it is bounded by a "camino vecinal" (Exh. "E-1"),
which passes between the two lots of respondents, proceeds to his (witness Pepito's) land, crosses the
National Road up to Sitio Looc between Km. 19 and Km. 20, up to Martires Street, facing Camotes; and
that when he was a child, he and his father used to pass through that "camino vecinal" in a carabao cart.
The Court finds no reason to disbelieve Mr. Pepito's testimony. 24
It discredited the version of the Pilapils in this wise:
4. Respondent Socrates Pilapil insisted on direct examination that there is no "camino vecinal" traversing
his lots. However, on cross-examination he declared that his two lots at Bahak, numbered 320 and 323,
were formerly covered by two separate tax declarations, but later he had (sic) fused into one, namely Tax
Declaration No. 15067 (Exh. "4"), which begins with the year 1985 (long after the present case was filed).
Respondent Socrates Pilapil admitted that before the fusion of the two tax declarations covering Lots 320
and 323 owned by him, those tax declarations showed that there was a "camino vecinal" at the South
boundary of Lot 320 and at the North Boundary of Lot 323, but after the fusion of the two tax declarations
into one, the "camino vecinal" no longer appears in the new tax declaration (Exh. "4").
In the face of the foregoing established facts, it would appear that the common testimony of respondent
Socrates Pilapil and Ramon Sungahid to the effect that there is no "camino vecinal" across respondents'
lots is nothing more than an unsupported conclusion. Mr. Sungahid adamantly insisted that there was no
such "camino vecinal" despite the fact that he was confronted on cross-examination with tax declarations
stating that there was a "camino vecinal" across respondents' lot. Ironically, when respondent Socrates
Pilapil later took the witness stand, as already stated, he himself admitted that the tax declarations
previously covering his two lots showed that there was a "camino vecinal" between the lots.
Respondents' other witness, Engr. Epifanio Jordan, Municipal Planning & Development Coordinator of
Liloan, prepared a zoning map (Exh. "1") of Poblacion, Liloan. The map contains a portion (Exh. "1-F")
which shows "camino vecinal" passing through the land of respondents at Bahak, but he declared that the
"camino vecinal" on the map is merely a proposal by his office to the Sangguniang Bayan of Liloan. The
Court notes that in the map (Exh. "I") (sic) some streets and projects are labelled "proposed," but the
"camino vecinal" (Exh. "I-F") (sic) which Engr. Jordan admits to be passing through respondents' land is
not so labelled. Besides, it is not clear whether or not he was authorized him. On direct examination he
declared that the Sangguniang Bayan instructed him to prepare the map; but on cross-examination he
stated, when asked whether the Sangguniang Bayan authorized him to prepare the map, that it was the
Mayor who directed him to do so. 25

The Pilapils appealed from the above decision to the public respondent Court of Appeals which docketed the case as CAG.R. CV No. 17235. In support of their plea for the reversal of the decision, the Pilapils sought to convince the public
respondent that the trial court erred in:
I . . . HOLDING THAT A CAMINO VECINAL EXISTED ACROSS THE LOT OF THE DEFENDANTS . . .
II . . . NOT APPRECIATING THE EVIDENCE PRESENTED BY THE DEFENDANTS . . .
III . . . CONDEMNING THE DEFENDANT . . . TO PAY PLAINTIFFS . . . JOINTLY AND SEVERALLY THE
SUM OF P4,500.00 AS ACTUAL DAMAGES, THE SUM OF P5,000.00 AS ATTORNEY'S FEES, THE
SUM OF P2,000.00 AS LITIGATION EXPENSES AND TO PAY THE COSTS.
IV . . . NOT AWARDING TO DEFENDANTS . . . DAMAGES TO COMPENSATE FOR THE DAMAGED
CONCRETE SLABS, COCONUTS, BANANAS AND OTHER FRUIT TREES THAT WAS (sic) CAUSED
BY THE BULLDOZER HIRED BY THE PLAINTIFFS . . . ATTORNEY'S FEES, LITIGATION EXPENSES
AND COSTS. 26
In its decision affirming in toto the 8 February 1988 ruling of the trial court, the public respondent opined that the
arguments adduced in support of the assigned errors boil down to the question of credibility of the witnesses and the
weight assigned by the lower court to their testimonies and the documentary exhibits. It then concluded that (a) there
exists no exception to the deeply rooted rule that findings of fact of trial courts are entitled to great weight and respect and
will not be disturbed on appeal; (b) while the 18 August 1973 Resolution of the Municipal Council of Liloan (Exhibit "A")
does not state that the camino vecinal traverses the property of the Pilapils, the testimony of Sesenando Longakit, the
person named therein who has knowledge of the surrounding facts and circumstances, and who was present during the
deliberations, passage and signing thereof, confirmed the existence of the camino vecinal on the property of the Pilapils;
(c) as to the claimed damages to the fruit trees and other plants belonging to the Pilapils, the same had been separately
litigated on, at the latter's instance, before the Municipal Circuit Trial Court and had already been resolved against the
Pilapils; besides, there is insufficient proof to indicate that damage was done to such plants or that the Pilapils planted
trees and other plants on thecamino vecinal; and (d) there is no merit in the claim that witnesses Longakit and Pepito,
being private individuals, are incompetent to testify on the existence and location of the camino vecinal; both possess all
the qualifications and none of the disqualification's for witnesses under Section 20, Rule 130 of the Rules of Court. As
regards Exhibit "1" which the Pilapils relied upon in support of their theory that the camino vecinal does not traverse their
property, the public respondent made the following disquisition:
Respondents-appellants' Exhibit "1" is a zoning map for the Poblacion of the Municipality of Liloan (TSN,
Epifanio Jordan, February 12 1986, p. 6), prepared and testified to by Engineer Epifanio Jordan,
Municipal Planning and Development Coordinator of Liloan. By this Exhibit, respondents-appellants
attempted to show that no "camino vecinal" existed across their land, and that although there is a "camino
vecinal" illustrated therein, it is a proposed one and does not traverse, but only passes through the side of
their land (TSN, Epifanio Jordan, November 5, 1985, p. 10; Exhibit "1-F").
After a thorough perusal of Exhibit "1" and a careful review of the transcript of stenographic notes taken
on November 5, 1985 and February 12, 1986, We find that the "camino vecinal" illustrated in Exhibit "1"
and claimed by witness Engineer Epifanio Jordan as a proposed "camino vecinal" (TSN, Epifanio Jordan,
November 5, 1985, p. 10), is indeed not so labelled as the other proposed streets or passageways are.
And more importantly, witness Engineer Epifanio Jordan did in fact admit and establish the existence of
the "camino vecinal" traversing respondents-appellants land.
Respondents-appellants' witness, Engineer Epifanio Jordan produced before the lower court an old map
of the Poblacion which was drawn and traced by a certain Atty. Sotero Auman, and from which said
witnesses (sic) based his Exhibit "1". In Exhibit "1" witness Engineer Epifanio Jordan identified
respondents-appellants' land as that encompassed in the circle, Exhibit "1-C" also Exhibit "G-1". On
cross-examination, when confronted and asked to compare his zoning map (Exhibit "1") with the old map,
it was shown that said Exhibit "1-A" also Exhibit "G-1", encompasses the figures "320" and "323" Lot
numbers appearing in the old map, and (sic) consequently, was (sic) identified by said witness and
marked as Exhibits "G-1-b" and "G-1-c" respectively, in Exhibit "1"; and that furthermore, the "camino
vecinal," Exhibit "G-1-a", passess (sic) between Lot Nos. 320 and 323 which lots (sic) belong to
respondents-appellants (TSN, Epifanio Jordan, February 12, 1986, pp. 1-13).

It is noted that on direct examination, witness Engineer Epifanio Jordan testified that the Sangguniang
Bayan of Liloan, Cebu, instructed him to prepare the zoning map (Exhibit "1") (TSN, Epifanio Jordan,
November 5, 1985, p. 9) but on cross-examination, stated (sic) that he did so upon oral orders of the
mayor (TSN, Epifanio Jordan, February 12, 1986, pp. 6-7). Also on cross-examination, said witness
testified that the zoning map (Exhibit "1") prepared by him was based on an old map drawn and traced by
Atty. Sotero Auman, a casual worker in the Municipality of Liloan (Ibid., pp. 8 and 14) yet on redirect
examination testified (sic) that he did not know who authorized said Atty. Sotero Auman to draw the map
which served as his basis for Exhibit "1", or if it was approved by the Sangguniang Bayan of Liloan (Ibid.,
pp. 14-15). 27
Their motion for the reconsideration of the above decision having been denied by the public respondent Court of Appeals
in its Resolution of 13 February 1991, 28 the Pilapils filed by mail on 8 April 1991 the instant petition. They interpose the
following ground for the allowance thereof:
4. The respondent Court, in affirming the Decision of the respondent RTC and in denying petitioners'
motion for reconsideration, acted in a manner so patently and grossly contrary to law and jurisprudence,
resulting in a miscarriage of justice to the prejudice and detriment of petitioners, by:
4.1. disregarding the official act of the Sangguniang Bayan of the Municipality of Lilo-an,
Cebu;
4.2. quoting merely a portion of the testimony of a witness and not the totality of his
testimony;
4.3. considering documentary exhibits not formally offered in evidence;
4.4. affirming the award of damages to the private respondent, and
4.5. affirming the denial of the award of damages to the petitioners.

29

In a Manifestation 30 posted on 17 May 1991, the Colomidas pray for the dismissal of the petition on the basis of the rule
on conclusiveness of findings of fact of the Court of Appeals; they further aver that the petition is but another attempt on
the part of the Pilapils to unjustly delay the final resolution of the case.
Petitioners moved to expunge 31 the Manifestation on the ground that it was filed without prior leave of the Court and that
it is not one of the pleadings allowed by the Rules of Court or required by this Court. We denied this motion, considered
the Manifestation as the Colomidas' Comment to the petition and required the Pilapils to file a reply thereto, 32 which they
subsequently complied with 33
We then gave due course to the petition and required the parties to submit their respective Memoranda.

34

The core issue in this case, as already stated, is whether or not the Municipality of Liloan has a camino vecinal in sitio
Bahak of barangay Poblacion, and if it does, whether such road traverses the property of the Pilapils of only passes along
its side. While both parties agree that a camino vecinal actually exists, the Colomidas assert that the same traverses the
property of the Pilapils. The latter, on the other hand, vigorously maintain that it does not. By any standard, the issue is
quite simple and could have been easily resolved without much procedural fanfare if the trial court either took full
advantage of the rule on pre-trial, 35 or conducted an ocular inspection of the premises. Such inspection would have been
a wise course of action 36 to take in view of the divergent versions of the parties as to the location of the camino vecinal.
Even the Colomidas, as petitioners below, could have expedited the resolution of the controversy by moving for the
appointment of a commissioner who could determine the exact location of the camimo vecinal and submit a vicinity map
or plan indicating the same; and, if the parties cannot agree on its location, the latter could indicate its relative locations on
the basis of the parties' respective versions. The trial court's decision does not even make any reference to a pre-trial
conference being held. Neither does it appear that the appointment of a commissioner, allowed by the Rules of
Court, 37 was sought. As a consequence thereof, it took the trial court more than six (6) long years to decide the case. And
even then, it had to contend with conflicting testimonial evidence and draw conclusions from a sketch prepared by witness
Sesenando Longakit, the zoning map prepared by Engineer Jordan and various tax declarations.
The above issue has been further obscured by the unnecessary quibbling on whether or not the testimonies of
Sesenando Longakit and Florentino Pepito should be accorded full faith and credit. To this Court's mind, the issue of their
credibility has been rendered moot by the unrebutted evidence which shows that the Municipality of Liloan, through its

Sangguniang Bayan, had approved a zoning plan, otherwise called an Urban Land Use Plan. 38 This plan indicates the
relative location of the camino vecinal in sitio Bahak, 39 Poblacion, Liloan, Cebu.
It is beyond dispute that the establishment, closure or abandonment of the camino vecinal is the sole prerogative of the
Municipality of Liloan. No private party can interfere with such a right. Thus, even if We are to agree with both the trial
court and public respondent that Longakit and Pepito were telling the truth, the decision of the Municipality of Liloan with
respect to the said camino vecinal in sitio Bahak must prevail. It is thus pointless to concentrate on the testimonies of both
witnesses since the same have, for all intents and purposes, become irrelevant.
The property of provinces, cities and municipalities is divided into property for public use and patrimonial property. 40 The
first consists of the provincial roads, city streets, municipal streets, squares, fountains, public waters, promenades, and
public works for public service paid for by the said provinces, cities or municipalities. 41 They are governed by the same
principles as property of public dominion of the same character. 42 Under the applicable law in this case, Batas Pambansa
Blg. 337 (The Local Government Code), the Sangguniang Bayan, the legislative body of the municipality, 43 had the power
to adopt zoning and subdivision ordinances or regulations subject to the provisions of existing laws, and to provide for the
construction, improvement, repair and maintenance of municipal streets, avenues, alleys, sidewalks, bridges, parks and
other public places, regulate the use thereof and prohibit the construction or placing of obstacles or encroachments on
them 44 Section 10, Chapter 2, Title One, Book I of said Code provided: 45
Sec. 10. Closure of roads. A local government unit may likewise, through its head acting pursuant to a
resolution of its Sangguniang and in accordance with existing law and the provisions of this Code, close
any barangay, municipal, city or provincial road, street, alley, park or square. No such way or place or any
part thereof shall be closed without indemnifying any person prejudiced thereby. A property thus
withdrawn from public use may be used or conveyed for any purpose for which other real property
belonging to the local unit concerned might be lawfully used or conveyed.
A camino vecinal is a municipal road. It is also property for public use. Pursuant, therefore, to the above powers of a local
government unit, the Municipality of Liloan had the unassailable authority to (a) prepare and adopt a land use map, (b)
promulgate a zoning ordinance which may consider, among other things, the municipal roads to be constructed,
maintained, improved or repaired and (c) close any municipal road.
In the instant case, the Municipality of Liloan, through the Sangguniang Bayan, approved the Urban Land Use Plan; this
plan was duly signed by the Municipal Mayor (Exhibit "1"). By doing so, the said legislative body determined, among
others, the location of the camino vecinal in sitio Bahak. The following unrebutted testimony of Engineer Epifanio Jordan
shows that the same was approved by the Sangguniang Bayan:
ATTY. CAETE:
xxx xxx xxx
Q After you prepared this map, what did you do with this?
A I submitted the map to the Sangguniang Bayan of Liloan, Cebu for approval and action.
Q What action was taken by the Sangguniang Bayan of Liloan, Cebu in (sic) this map
that you prepared and submitted?
A It approved the map.
Q Why do you know that this map was approved by the Sangguniang Bayan of Liloan,
Cebu?
A I was present during the session.
COURT:
Q You mean there was a resolution passed by the Sangguniang Bayan of Liloan, Cebu?
A Yes, sir. 46

The reluctance of the trial court and public respondent to give due weight to the testimony of Engineer Jordan stemmed
from a doubt as to his authority to prepare the plan. There is also some confusion regarding the party who directed him to
do so. Both courts observed that while on direct examination, he testified that the Sangguniang Bayan instructed him to
prepare the zoning map, 47 during cross-examination, he stated that he prepared it upon the Mayor's oral order. 48 Such
inconsistency is quite trivial and hence, did not affect the preparation and subsequent approval of the zoning map. In the
first place, under the applicable law, the mayor was both a member and the presiding officer of the Sangguniang
Bayan. 49 Secondly, what invested the zoning map with legal effect was neither the authority of the person who ordered its
preparation nor the authority of the person who actually prepared it, but its approval by the Sangguniang Bayan.
Furthermore, with or without the order of the Mayor or Sangguniang Bayan, Engineer Jordan, as the then Municipal
Planning and Development Coordinator, had the authority to prepare the plan and admit it to the Sangguniang Bayan for
approval. Among his functions under the governing law at the time was to formulate an integrated economic, social,
physical and other development objectives and policies for the consideration and approval of thesangguniang bayan and
the municipal mayor, and prepare municipal comprehensive plans and other development planning document. 50 Thus,
even if he had not been instructed by anyone to prepare the map, he could nevertheless, on his own initiative and by
virtue of his functions, make one. The trial court and public respondent then failed to appreciate the role and function of a
Municipal Planning and Development Coordinator.
As further declared by Engineer Jordan, this camino vecinal in sitio Bahak "passes the side of the land of Socrates Pilapil.
This is the proposed road leading to the national highway." 51 The Colomidas presented no rebuttal witness to show that
by the approval of the zoning map by the Sangguniang Bayan, they were effectively deprived of access to the national
highway from their property. Of course, they may argue that the zoning map was prepared for and approved by the
Sangguniang Bayan after the filing of their petition in Civil Case No. R-20732. Be that as it may, this preparation and
approval, clearly a supervening event, was relied upon, introduced in evidence without objection on the part of the
Colomidas and evaluated by the trial court. In short, the latter allowed the issue raised by the supervening event to be
tried. There was nothing procedurally objectionable to this; on the contrary, Section 5, Rule 10 of the Rules of Court
allows it. Said section reads:
Sec. 5. Amendment to conform to or authorize presentation of evidence. When issues not raised by
the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects,
as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to
cause them to conform to the evidence and to raise these issues may be made upon motion of any party
at any time, even after judgment, but failure to amend does not affect the result of the trial of these
issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the
pleadings, the court may allow the pleading, to be amended and shall do so freely when the presentation
on the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that
the admission of such evidence would prejudice him in maintaining his action or defense upon the merits.
The court may grant a continuance to enable the objecting party to meet such evidence.
Such supervening fact, duly proved to be an official act of the Municipality of Liloan, binds not only the Pilapils and the
Colomidas, but also the general public. The solemn declarations of old people like Sesenando Longakit and Florentino
Pepito cannot overturn the decision of the Municipality of Liloan.
The foregoing exposition renders unnecessary further discussion on the other issues raised by the petitioners.
WHEREFORE, the instant Petition is GRANTED. The challenged Decision of 26 October 1990 and Resolution of 13
February 1991 of public respondent Court of Appeals in CA-G.R. CV No. 17235, as well as the Decision of 8 February
1988 of Branch 17 of the Regional Trial Court of Cebu in Civil Case No. R-20732 are hereby SET ASIDE. Said Civil Case
No. R-20732 is hereby DISMISSED with costs against the private respondents.
SO ORDERED.

22. 53 PHIL 112

THE GOVERNMENT OF THE PHILIPPINE ISLANDS vs. CONSORCIA CABANGIS, ET AL., (G.R. No. L-28379, March
27, 1929)
The Government of the Philippine Islands appeals to this court from the judgment of the Court of First Instance of Manila
in cadastral proceeding No. 373 of the Court of First Instance of Manila, G. L. R. O. Cadastral Record No. 373,
adjudicating the title and decreeing the registration of lots Nos. 36, 39 and 40, block 3055 of the cadastral survey of the
City of Manila in favor of Consuelo, Consorcia, Elvira and Tomas, surnamed Cabangis, in equal parts, and dismissing the
claims presented by the Government of the Philippine Islands and the City of Manila.
In support of its appeal, the appellant assigns the following alleged errors as committed by the trial court in its judgment,
to wit:
1. The lower court erred in not holding that the lots in question are of the public domain, the same having been
gained from the sea (Manila Bay) by accession, by fillings made by the Bureau of Public Works and by the
construction of the break-water (built by the Bureau of Navigation) near the mouth of Vitas Estero.
2. The lower court erred in holding that the lots in question formed part of the big parcel of land belonging to the
spouses Maximo Cabangis and Tita Andres, and in holding that these spouses and their successors in interest
have been in continuous, public, peaceful and uninterrupted possession of said lots up to the time this case came
up.
3. The lower court erred in holding that said lots existed before, but that due to the current of the Pasig River and
to the action of the big waves in Manila Bay during the south-west monsoons, the same disappeared.
4. The lower court erred in adjudicating the registration of the lands in question in the name of the appellees, and
in denying the appellant's motion for a new trial.
A preponderance of the evidence in the record which may properly be taken into consideration in deciding the case,
proves the following facts:
Lots 36, 39 and 40, block 3035 of cadastral proceeding No. 71 of the City of Manila, G. L. R. O. Record No. 373, were
formerly a part of a large parcel of land belonging to the predecessor of the herein claimants and appellees. From the year
1896 said land began to wear away, due to the action of the waves of Manila Bay, until the year 1901 when the said lots
became completely submerged in water in ordinary tides, and remained in such a state until 1912 when the Government
undertook the dredging of Vitas Estuary in order to facilitate navigation, depositing all the sand and silt taken from the bed
of the estuary on the low lands which were completely covered with water, surrounding that belonging to the Philippine
Manufacturing Company, thereby slowly and gradually forming the lots, the subject matter of this proceeding.
Up to the month of February, 1927 nobody had declared lot 39 for the purposes of taxation, and it was only in the year
1926 that Dr. Pedro Gil, in behalf of the claimants and appellees, declared lot No. 40 for such purpose.
In view of the facts just stated, as proved by a preponderance of the evidence, the question arises: Who owns lots 36, 39
and 40 in question?
The claimants-appellees contend that inasmuch as the said lots once formed a part of a large parcel of land belonging to
their predecessors, whom they succeeded, and their immediate predecessor in interest, Tomas Cabangis, having taken
possession thereof as soon as they were reclaimed, giving his permission to some fishermen to dry their fishing nets and
deposit their bancas thereon, said lots belong to them.
Article 339, subsection 1, of the Civil Code, reads:
Article 339. Property of public ownership is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State,
riverbanks, shorts, roadsteads, and that of a similar character.
xxx

xxx

xxx

Article 1, case 3, of the Law of Waters of August 3, 1866, provides as follows:

ARTICLE 1. The following are part of the national domain open to public use:
xxx

xxx

xxx

3. The Shores. By the shore is understood that space covered and uncovered by the movement of the tide. Its
interior or terrestrial limit is the line reached by the highest equinoctial tides. Where the tides are not appreciable,
the shore begins on the land side at the line reached by the sea during ordinary storms or tempests.
In the case of Aragon vs. Insular Government (19 Phil., 223), with reference to article 339 of the Civil Code just quoted,
this court said:
We should not be understood, by this decision, to hold that in a case of gradual encroachment or erosion by the ebb and
flow of the tide, private property may not become 'property of public ownership,' as defined in article 339 of the code,
where it appears that the owner has to all intents and purposes abandoned it and permitted it to be totally destroyed, so
as to become a part of the 'playa' (shore of the seas), 'rada' (roadstead), or the like. . . .
In the Enciclopedia Juridica Espanola, volume XII, page 558, we read the following:
With relative frequency the opposite phenomenon occurs; that is, the sea advances and private properties are
permanently invaded by the waves, and in this case they become part of the shore or beach. They then pass to
the public domain, but the owner thus dispossessed does not retain any right to the natural products resulting
from their new nature; it is a de facto case of eminent domain, and not subject to indemnity.
Now then , when said land was reclaimed, did the claimants-appellees or their predecessors recover it as their original
property?
As we have seen, the land belonging to the predecessors of the herein claimants-appellees began to wear way in 1896,
owing to the gradual erosion caused by the ebb and flow of the tide, until the year 1901, when the waters of Manila Bay
completely submerged a portion of it, included within lots 36, 39 and 40 here in question, remaining thus under water until
reclaimed as a result of certain work done by the Government in 1912. According to the above-cited authorities said
portion of land, that is, lots 36, 39 and 40, which was private property, became a part of the public domain. The
predecessors of the herein claimants-appellees could have protected their land by building a retaining wall, with the
consent of competent authority, in 1896 when the waters of the sea began to wear it away, in accordance with the
provisions of Article 29 of the aforecited Law of Waters of August 3, 1866, and their failure to do so until 1901, when a
portion of the same became completely covered by said waters, remaining thus submerged until 1912, constitutes
abandonment.
Now then: The lots under discussion having been reclaimed from the seas as a result of certain work done by the
Government, to whom do they belong?
The answer to this question is found in article 5 of the aforementioned Law of Waters, which is as follows:

ART. 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces,
pueblos or private persons, with proper permission, shall become the property of the party constructing such
works, unless otherwise provided by the terms of the grant of authority.
The fact that from 1912 some fishermen had been drying their fishing nets and depositing their bancas on lots 36, 39 and
40, by permission of Tomas Cabangis, does not confer on the latter or his successors the ownership of said lots, because,
as they were converted into public land, no private person could acquire title thereto except in the form and manner
established by the law.
In the case of Buzon vs. Insular Government and City of Manila (13 Phil., 324), cited by the claimants-appellees, this
court, admitting the findings and holdings of the lower court, said the following:

If we heed the parol evidence, we find that the seashore was formerly about one hundred brazas distant from the
land in question; that, in the course of time, and by the removal of a considerable quantity of sand from the shore
at the back of the land for the use of the street car company in filling in Calle Cervantes, the sea water in ordinary
tides now covers part of the land described in the petition.
The fact that certain land, not the bed of a river or of the sea, is covered by sea water during the period of
ordinary high tide, is not a reason established by any law to cause the loss thereof, especially when, as in the
present case, it becomes covered by water owing to circumstances entirely independent of the will of the owner.
In the case of Director of Lands vs. Aguilar (G.R. No. 22034),1 also cited by the claimants-appellees, wherein the
Government adduced no evidence in support of its contention, the lower court said in part:
The contention of the claimants Cabangis is to the effect that said lots are a part of the adjoining land adjudicated
to their deceased father, Don Tomas Cabangis, which, for over fifty years had belonged to their deceased
grandmother, Tita Andres, and that, due to certain improvements made in Manila Bay, the waters of the sea
covered a large part of the lots herein claimed.
The Government of the Philippine Islands also claims the ownership of said lots, because, at ordinary high tide,
they are covered by the sea.
Upon petition of the parties, the lower court made an ocular inspection of said lots on September 12, 1923, and
on said inspection found some light material houses built thereon, and that on that occasion the waters of the sea
did not reach the aforesaid lots.
From the evidence adduced at the trial of this cause, it may be inferred that Tita Andres, during her lifetime was
the owner of a rather large parcel of land which was adjudicated by a decree to her son Tomas Cabangis; the lots
now in question are contiguous to that land and are covered by the waters of the sea at extraordinary high tide;
some 50 years before the sea did not reach said strip of land, and on it were constructed, for the most part, light
material houses, occupied by the tenants of Tita Andres, to whom they paid rent. Upon her death, her son Tomas
Cabangis succeeded to the possession, and his children succeeded him, they being the present claimants,
Consuelo, Jesus, Tomas, and Consorcia Cabangis.
The Government of the Philippine Islands did not adduce any evidence in support of its contention, with the
exception of registry record No. 8147, to show that the lots here in question were not excluded from the
application presented in said proceeding.
It will be seen that in the case of Buzon vs. Insular Government and City of Manila, cited above, the rise of the waters of
the sea that covered the lands there in dispute, was due not to the action of the tide but to the fact that a large quantity of
sand was taken from the sea at the side of said land in order to fill in Cervantes Street, and this court properly held that
because of this act, entirely independent of the will of the owner of said land, the latter could not lose the ownership
thereof, and the mere fact that the waters of the sea covered it as a result of said act, is not sufficient to convert it into
public land, especially, as the land was high and appropriate for building purposes.
In the case of the Director of Lands vs. Aguilar also cited by the claimants-appellees, the Insular Government did not
present any evidence in support of its contention, thus leaving uncontradicted the evidence adduced by the claimants
Aguilar et al., as to the ownership, possession and occupation of said lots.
In the instant case the evidence shows that from 1896, the waves of Manila Bay had been gradually and constantly
washing away the sand that formed the lots here in question, until 1901, when the sea water completely covered them,
and thus they remained until the year 1912. In the latter year they were reclaimed from the sea by filling in with sand and
silt extracted from the bed of Vitas Estuary when the Government dredged said estuary in order to facilitate navigation.
Neither the herein claimants-appellees nor their predecessors did anything to prevent their destruction.
In conclusion, then, we hold that the lots in question having disappeared on account of the gradual erosion due to the ebb
and flow of the tide, and having remained in such a state until they were reclaimed from the sea by the filling in done by
the Government, they are public land. (Aragon vs. Insular Government, 19 Phil., 223; Francisco vs. Government of the
Philippine Islands, 28 Phil., 505). By virtue whereof, the judgment appealed from is reversed and lots Nos. 36, 39 and 40
of cadastral proceeding No. 373 of the City of Manila are held to be public land belonging to the Government of the United
States under the administration and control of the Government of the Philippine Islands. So ordered.