IMMOVABLE AND MOVABLE PROPERTY (ART.

and Plaza theatre be held liable solidarily for

415-418) the unpaid balance; and in case defendants
failed to pay, the land and building should be
JRPA sold in public auction with the proceeds to be
Lopez v. Orosa applied to the balance; or that the shares of
G.R. Nos. L-10817-18, 103 SCRA 98 stock be sold in public auction. Lopez also had
lis pendens be annotated in the OCT. The trial
DOCTRINE:For while it is true that generally, court decided that there was joint liability
real estate connotes the land and the building between defendants and that the material
constructed thereon, it is obvious that the man’s lien was only confined to the building.
inclusion of the building in the enumeration of
what may constitute real properties could only ISSUE:
mean one thing—that a building is by itself an W/N the material men’s lien for the value of the
immovable property materials used in the construction of the
building attaches to said structure alone and
FACTS: doesn’t extend to the land on which the
Lopez was engaged in business under the building is adhered to?
name Lopez-Castelo Sawmill. Orosa, who lived
in the same province as Lopez, one day HELD:
approached Lopez and invited the latter to The contention that the lien executed in favor
make an investment in the theatre business. of the furnisher of materials used for the
Orosa, his family and close friends apparently construction and repair of a building is also
were forming a corporation named Plaza extended to land on which the building was
Theatre. Lopez expressed his unwillingness to constructed is without merit. For while it is true
invest. Nonetheless, there was an oral that generally, real estate connotes the land
agreement between Lopez and Orosa that and the building constructed thereon, it is
Lopez would be supplying the lumber for the obvious that the inclusion of the building in the
construction of the theatre. The terms were the enumeration of what may constitute real
following: one, Orosa would be personally properties could only mean one thing—that a
liable for any account that the said construction building is by itself an immovable property.
would incur; two, payment would be by Moreover, in the absence ofany specific
demand and not by cash on delivery. provision to the contrary, a building is an
immovable property irrespective of whether or
Pursuant to the agreement, Lopez delivered not said structure and the land on which it is
the lumber for the construction. Lopez was only adhered to belong to the same owner.
paid one-third of the total cost. The land on Appellant invoked Article 1923 of the Spanish
which the building has been erected was Civil Code, which provides—“With respect to
previously owned by Orosa, which was later on determinate real property and real rights of the
purchased by the corporation. Due to the debtor, the following are preferred: xxx Credits
incessant demands of Lopez, the corporation for reflection, not entered or recorded, and only
mortgaged its properties. On an earlier relevant with respect to other credits different from
date, the corporation obtained a loan with those mentioned in four next preceding
Luzon Surety Company as surety and in turn, paragraphs.” Close examination of the
the corporation executed a mortgage over the abovementioned provision reveals that the law
land and building. In the registration of the land gives preference to unregistered refectionary
under Act 496, such mortgage wasn’t revealed. credits only with respect to the real estate upon
Also due to the demands of Lopez, Orosa which the refectionary or work was made. This
issued a deed of assignment over his shares of being so, the inevitable conclusion must be
stock in the corporation. As there was still an that the lien so created attaches merely to the
unpaid balance, Lopez filed a case against immovable property for the construction or
Orosa and Plaza theatre. He asked that Orosa repair of which the obligation was incurred.
Therefore, the lien in favor of appellant for the
unpaid value of the lumber used in the ISSUE:
construction of the building attaches only to Which of the mortgages should have
said structure and to no other property of the preference?
obligors.
HELD:
ABB It was held in Lopez vs. Orosa that the building
Associated Insurance and Surety Company is an immovable itself, separate and distinct
v. Iya from the land. A building is an immovable
103 SCRA 972 property irrespective of whether or not said
structure and the land on which it is adhered to
DOCTRINE:A building is an immovable belong to the same owner.
property irrespective of where or not said
structure and the land on which it is adhered to Only personal properties can be the subject of
belong to the same owner. a chattel mortgage and since the structure in
this case is an immovable, it cannot subject to
FACTS: a chattel mortgage. Therefore the chattel
Spouses Adriano Valino and Lucia A. Valino mortgage and the sale on which it was based
own a house of strong materials. They filed a should be declared null and void. Also, while it
bond of P 11,000.00 subscribed by the is true that said document was registered in the
Associated Insurance and Surety Co., Inc. and Chattel Mortgage Register of Rizal, this act
as a counter-guaranty, the spouses Valino produced no effect whatsoever for where the
executed an alleged chattel mortgage on the interest conveyed is in the nature of a real
aforementioned house in favor of the surety property, the registration of the document in
company. the registry of chattels is merely a futile act
which would produce no legal effect insofar as
The parcel of land on which the house is the building is concerned.
erected was still registered in the name of the
Philippine Realty Corporation but was able to FZC
obtain the same from them after full payment of Bicerra v. Teneza
the purchase price. The Valinos acquired G.R. No. L-16218, 6 SCRA 648
another loan from Isabel Iya for P12,000.00,
executing a real estate mortgage over the DOCTRINE: A house is classified as
house and lot. However, they were unable to immovable property by reason of its adherence
pay off their other loan which caused the to the soil on which it is built (Article 415,
foreclosure of the chattel mortgage. The surety paragraph 1, Civil Code). This classification
company was awarded the land as the highest holds true regardless of the fact that the house
bidder in the auction but later on discovered may be situated on land belonging to a
that the land was subject to a real estate different owner. But once the house is
mortgage. The surety company then requested demolished it ceases to exist, hence its
that the house and lot be excluded from the character as an immovable likewise ceases.
real estate mortgage. Iya, in her answer, said
that she had a real right over the property and FACTS:
that the chattel mortgage on which the The Bicerras are supposedly the owners of the
foreclosure was based should be declared null house (PhP 20,000) built on a lot owned by
and void for non-compliance with the form them in Lagangilang, Abra which the Tenezas
required by law. The CA ruled that the forcibly demolished in January 1957, claiming
foreclosure of the real estate mortgage is to be the owners thereof. The materials of the
limited to the land alone and they awarded the house were placed in the custody of the barrio
structure to the surety company saying that the lieutenant. The Bicerras filed a complaint
house is a personal property and may be claiming actual damages of P200, moral and
subject to chattel mortgage. consequential damages amounting to P600,
and the costs. The CFI Abra dismissed the deed of sale was issued to him upon expiration
complaint claiming that the action was within of the period of redemption. When Evangelista
the exclusive (original) jurisdiction of the sought to take possession of the house, Rivera
Justice of the Peace Court of Lagangilang, refused to surrender it, upon the ground that he
Abra. had leased the property to the Alto Surety &
Insurance Co., Inc., respondent herein, and
The Supreme Court affirmed the order that the latter is now the true owner of said
appealed. Having been admitted in forma property. It appears that a definite deed of sale
pauperis, no costs were adjudged. of the same house had been issued to
respondent, as the highest bidder at an auction
ISSUE: sale held in compliance with a writ of
WON the house is immovable property even if execution. Hence, Evangelista instituted the
it is on the land of another present action against respondent and Rivera,
for the purpose of establishing his
HELD: (Evangelista) title over said house, securing
House is immovable property even if situated possession thereof, apart from recovering
on land belonging to a different owner; damages.
Exception, when demolished.
In its answer, respondent alleged that it has a
LNAC better right to the house, because the sale
Evangelista v. Alto Surety & Insurance Co., made, and the definite deed of sale executed,
Inc. in its favor, on September 29, 1950 and May
G.R. No. L-11139 10, 1952, respectively, precede the sale to
Evangelista (October 8, 1951) and the definite
DOCTRINE: Sales on execution affect the deed of sale in his favor (October 22, 1952).
public and third persons. The regulation Rivera, in effect, joined forces with respondent.
governing sales on execution are for public
officials to follow. The form of proceedings CFI rendered judgment for Evangelista,
prescribed for each kind of property is suited to sentencing Rivera and respondent to deliver
its character, not to the character, which the the house in question to petitioner herein and
parties have given to it or desire to give it. to pay him, jointly and severally from October,
When the rules speak of personal property, 1952, until said delivery, plus costs.
property which is ordinarily so considered is
meant; and when real property is spoken of, it On appeal taken by respondent, the above
means property which is generally known as decision was reversed by the CA which
real property. The regulations were never absolved Alto Surety from the complaint on
intended to suit the consideration that parties account that although the writ of attachment in
may have privately given to the property levied favor of Evangelista had been filed with the
upon. Register of Deeds of Manila prior to the sale in
favor of Alto Surety, Evangelista did not
FACTS: acquire thereby a preferential lien, the
Petitioner Santos Evangelista instituted a Civil attachment having been levied as if the house
Case for a sum of money. He obtained a writ of in question were immovable property.
attachment, which levied upon a house, built
by Rivera on a land situated in Manila and Evangelista now seeks a review by certiorari.
leased to him, by filing copy of said writ and the
corresponding notice of attachment with the ISSUE:
Office of the Register of Deeds of Manila. Whether a house, constructed by the lessee of
Judgment was rendered in favor of the land on which it is built, should be dealt
Evangelista, who, bought the house at public with, for purpose of attachment, as immovable
auction held in compliance with the writ of property, or as personal property.
execution issued in said case. The definite
HELD: auction. This ruling is demanded by the need
Said house is not personal property, much less for a definite, orderly and well defined
a debt, credit or other personal property not regulation for official and public guidance and
capable of manual delivery, but immovable would prevent confusion and
property. As explicitly held, in Laddera vs. misunderstanding.
Hodges, "a true building (not merely
superimposed on the soil) is immovable or real The foregoing considerations apply, with equal
property, whether it is erected by the owner of force, to the conditions for the levy of
the land or by usufructuary or lessee. attachment, for it similarly affects the public
and third persons.
It is true that the parties to a deed of chattel
mortgage may agree to consider a house as TKDC
personal property for purposes of said contract. Leung Yee v. Strong Machinery Co.
However, this view is good only insofar as the G.R. No. L-11658
contracting parties are concerned. It is based,
partly, upon the principle of estoppel. Neither DOCTRINE: The mere fact that the parties
this principle, nor said view, is applicable to decided to deal with the building as personal
strangers to said contract. Much less is it in property does not change its character as real
point where there has been no contract property. Neither the original registry in the
whatsoever, with respect to the status of the chattel mortgage registry nor the annotation in
house involved, as in the case at bar. said registry of the sale of the mortgaged
property had any effect on the building.
The rules on execution do not allow, and, we
should not interpret them in such a way as to FACTS:
allow, the special consideration that parties to Compañia Agricola Filipina bought several rice-
a contract may have desired to impart to real cleaning machinery from a machinery
estate, for example, as personal property, company, Frank L. Strong Machinery Company
when they are, not ordinarily so. Sales on and executed a chattel mortgage to secure
execution affect the public and third persons. payment of the purchase price. The deed of
The regulation governing sales on execution mortgage includes the building where the
are for public officials to follow. The form of machinery was installed without any reference
proceedings prescribed for each kind of to the land on which it stood. Since Compañia
property is suited to its character, not to the Agricola Filipina failed to pay when due, the
character, which the parties have given to it or mortgaged property was sold by the sheriff and
desire to give it. When the rules speak of was bought by the machinery company.
personal property, property which is ordinarily
so considered is meant; and when real Few weeks later, Compañia Agricola Filipina
property is spoken of, it means property which executed a deed of sale of the land where the
is generally known as real property. The building stood to the machinery company. In
regulations were never intended to suit the effect, the machinery company possessed the
consideration that parties may have privately building when the sale took place and
given to the property levied upon. Enforcement continued its possession ever since.
of regulations would be difficult were the
convenience or agreement of private parties to When the chattel mortgage was executed,
determine or govern the nature of the Compañia Agricola Filipina executed another
proceedings. mortgage in favor of Yee over the building to
pay its debt to the machinery company. Since
The mere fact that a house was the subject of Compañia Agricola Filipina failed to pay when
the chattel mortgage and was considered as due, Yee secured a judgment to levy execution
personal property by the parties does not make upon the building and bought the building at
said house personal property for purposes of the sheriff’s sale; Yee secured the sheriff’s
the notice to be given for its sale of public certificate of sale and registered it in the land
registry. are of a purely ministerial character; and no
provision of law can be cited which confers
When the execution was levied upon the upon him any judicial or quasi-judicial power to
building, the machinery company filed with the determine the nature of any document of which
sheriff a sworn statement setting up its claim of registration is sought as a chattel mortgage.
title and demanding the release of property
from the levy. On the other hand, Yee filed an FACTS:
action to recover possession of the building Gervasia de la Rosa, Vda. de Vera, was the
from the machinery company. Trial court ruled lessee of a parcel of land situated in Manila
in favor of the machinery company on the basis and owner of the house built thereon. She
of Article 1473 of the Civil Code; it ruled that executed a chattel mortgage in favor of
the machinery company registered the title to Standard Oil Co. to convey both the leasehold
the building prior to the registration date of interest in said lot and the building.After the
Yee’s certificate. document had been duly acknowledge and
delivered, petitioner presented it to the
ISSUE: respondent, Joaquin Jaramillo, as ROD of
Whether or not the nature of property is Manila, to be recorded in the book of record of
changed by its registration in the Chattel chattel mortgages. Upon examination of the
Mortgage Registry. -- NO instrument, Jaramillo was of the opinion that it
was not a chattel mortgage as the interest
HELD: mortgaged did not appear to be personal
The registry under Article 1473 of the Civil property, within the meaning of the Chattel
Code refers to registry of real property and the Mortgage Law, and registration was refused on
annotation or inscription of a deed of sale of this ground only. So, petitioner sought for a
real property in a chattel mortgage registry peremptory mandamus to compel the
cannot be given the legal effect of an respondent to record the said document in the
inscription in the registry of real property. register. Jaramillo interposed a demurrer
before the SC.
The Chattel Mortgage Law contemplates
mortgages of personal property. The sole ISSUE:
purpose and object of the chattel mortgage W/N the ROD can refuse the registration of a
registry is the registration of personal property Chattel Mortgage? NO
mortgages executed in the manner and form
prescribed in the statute. HELD:
It is his duty to accept the proper fee and place
In this case, the building where the rice- the instrument on record. The duties of a
cleaning machinery was installed was real register of deeds in respect to the registration
property. The mere fact that the parties dealt of chattel mortgage are of a purely ministerial
with it as separate and apart from the land on character; and no provision of law can be cited
which it stood does not change its character as which confers upon him any judicial or quasi-
real property. Neither the original registry of the judicial power to determine the nature of any
building in the chattel mortgage nor the document of which registration is sought as a
annotation of sale of the mortgaged property in chattel mortgage.
the registry had any effect on the building’s
nature as immovable property. The original provisions touching this matter are
contained in section 15 of the Chattel Mortgage
AMD Law (Act No. 1508), as amended by Act No.
Standard Oil Co. of New York v. Jaramillo 2496; but these have been transferred to
44 SCRA 630 section 198 of the Administrative Code. There
is nothing in any of these provisions conferring
DOCTRINE:The duties of a register of deeds in upon the register of deeds any authority
respect to the registration of chattel mortgage whatever in respect to the "qualification”, of
chattel mortgage. His duties in respect to such taxes which he may have paid thereon after
instruments are ministerial only. The efficacy of the purchase, and the interest corresponding
the act of recording a chattel mortgage thereto and that Valdez refused to accept the
consists in the fact that it operates as money and to return the sugar cane to the
constructive notice of the existence of the plaintiff.
contract, and the legal effects of the contract
must be discovered in the instrument itself in One of the defenses of the defendant Emiliano
relation with the fact of notice. Registration J. Valdez is that the sugar cane in question
adds nothing to the instrument, considered as had the nature of personal property and was
a source of title, and affects nobody's rights not, therefore, subject to redemption. The trial
except as a specifies of notice. court hold that the sugar cane in question was
personal property and, as such, was not
Articles 334 and 335 of the Civil Code supply subject to redemption.
no absolute criterion for discriminating between
real property and personal property for purpose ISSUE:
of the application of the Chattel Mortgage Law. Whether the sugar cane in question is personal
Those articles state rules which, considered as or real property under civil code? Under chattel
a general doctrine, are law in this jurisdiction; mortgage law?
but it must not be forgotten that under given
conditions property may have character HELD:
different from that imputed to it in said articles. The court ruled that It is contended that sugar
It is undeniable that the parties to a contract cane comes under the classification of real
may by agreement treat as personal property property as "ungathered products" in
that which by nature would be real property; paragraph 2 of article 334 of the Civil Code.
and it is a familiar phenomenon to see things Said paragraph 2 of article 334 enumerates as
classed as real property for purposes of real property the following: Trees, plants, and
taxation which on general principle might be ungathered products, while they are annexed
considered personal property. to the land or form an integral part of any
immovable property."
CRF
Sibal v. Valdez We may, therefore, conclude that paragraph 2
G.R. No. L-27532 of article 334 of the Civil Code has been
modified by section 450 of the Code of Civil
DOCTRINE:For the purpose of attachment and Procedure and by Act No. 1508, in the sense
execution, and for the purposes of the Chattel that, for the purpose of attachment and
Mortgage Law, "ungathered products" have the execution, and for the purposes of the Chattel
nature of personal property. (batasnatin) Mortgage Law, "ungathered products" have the
nature of personal property. The lower court,
FACTS: therefore, committed no error in holding that
As a first cause of action the plaintiff alleged the sugar cane in question was personal
that the defendant Vitaliano Mamawal, deputy property and, as such, was not subject to
sheriff of the Province of Tarlac, by virtue of a redemption.
writ of execution issued by the Court of First
Instance of Pampanga, attached and sold to MPF
the defendant Emiliano J. Valdez the sugar Tsai v. CA
cane planted by the plaintiff and his tenants on G.R. No. 120098
seven parcels of land. That within one year DOCTRINE: Even if the properties are
from the date of the attachment and sale the immovable by nature, nothing detracts the
plaintiff offered to redeem said sugar cane and parties from treating them as chattels to secure
tendered to the defendant Valdez the amount an obligation under the principle of estoppel.
sufficient to cover the price paid by the latter,
the interest thereon and any assessments or FACTS:
 ● EVERTEX secured a loan from under the principle of estoppel.
PBC, guaranteed by real estate and chattel
mortgage over a parcel of land where the AMDG
factory stands, and the chattels located Yap v. Tanada
therein, as included in a schedule attached G.R. No. L-32917
to the mortgage contract. another loan was
obtained secured by a chattel mortgage DOCTRINE: The Civil code considers as
over properties with similar descriptions immovable property among others, anything
listed in the first schedule. “attached to an immovable in a fixed manner,
● During the date of execution of in such a way that it cannot be separated
the second mortgage. EVERTEX therefrom without breaking the material or
purchased machineries and equipment. deterioration of the object”
● Due to business reverses,
EVERTEX filed for insolvency proceedings. FACTS:
It failed to pay its obligation and thus, PBC Goulds Pumps International (Phil.), Inc. (herein
initiated extrajudicial foreclosure of the Goulds) filed a complaint against Yap and his
mortgages. wife seeking to recover the balance of the
● PBC was the highest bidder in price and installation of the water pump in the
the public auctions, making it the owner of latter’s residence. The city court declared Yap
the properties. It then leased the factory and his wife in default and rendered a
premises to Tsai. judgment in favor of Goulds. Yap appealed to
● Afterwards, EVERTEX sought the the CFI wherein Judge Tanada was residing.
annulment of the sale and conveyance of Yap was again declared in default and
the properties to PBC as it was allegedly a judgment was again rendered in favor of
violation of the insolvency law. Goulds. Later on, Judge Tanada granted
● The RTC held that the lease and Gould’s Motion for Issuance of Writ of
sale were irregular as it involved properties Execution. Subsequently, the water pump was
not included in the schedule of the sold in a public auction in favor of Goulds being
mortgage contract. the highest bidder. Another writ of execution
was issued as regards the removal of the water
ISSUE: pump and delivery of such to Goulds. Yap is
Whether or not the (immovable) properties in questioning validity of the auction sale and
question can be entered into a chattel praying that it be annulled as well as the writ of
mortgage. -- YES execution. Yap is alleging that the water pump
is considered as an immovable property
HELD: because it is installed in his residence. He also
An immovable may be considered a personal argued that being an immovable property, a
property if there is a stipulation as when it is notice must be made before the auction sale
used as security in the payment of an pursuant to the Rules of Court. It is noted that
obligation where a chattel mortgage is
executed over it, as in the case at bar. While it Yap filed several motion of reconsideration to
is true that the controverted properties appear which all were denied.
to be immobile, a perusal of the contract of real
estate mortgage and chattel mortgage by the ISSUE:
parties gives a contrary indication. Both the Whether or not the water pump is an
trial and appellate courts show that the immovable property -- NO
intention was to treat the machineries as
movables or personal property. HELD:
The Civil code considers as immovable
Assuming that the properties were considered property among others, anything “attached to
immovables, nothing detracts the parties from an immovable in a fixed manner, in such a way
treating it as chattels to secure an obligation that it cannot be separated therefrom without
breaking the material or deterioration of the commercial purposes for which petitioner has
object” never engaged in,

The water pump involved in this case does not The City Assessor of CDO then assessed a
satisfy the above description. It is highly P4,400 realty tax on said machineries and
possible to remove the water pump without it repair equipment. This was then appealed to
breaking or deteriorating by simply loosening the Court of Tax Appeals (CTA) who sustained
the bolts or dismantling the fasteners that were the respondent city assessor's ruling.
used to attach or install it in his house.
ISSUE:
GCG Whether or not the machineries and the
Mindanao Bus Co. v. City Assessor and equipments are considered immobilized and
Treasurer thus subject to a realty tax. -- NO
G.R. No. L-17870
HELD:
DOCTRINE: Movable equipment, to be The Supreme Court held a decision for the
immobilized in contemplation of Article 415 of petition for review to be set aside and the
the Civil Code, must be the essential and equipments in question declared not subject to
principal elements of an industry or works assessment as real estate for the purposes of
which are carried on in a building or on a piece the real estate tax.
of land. Thus, where the business is one of
transportation, which is carried on without a The law that governs the determination
repair or service shop, and its rolling of the question at issue is as follows:
equipment is repaired or serviced in a shop
belonging to another, the tools and equipment Art. 415. The following are immovable
in its repair shop which appear movable are property:
merely incidentals and may not be considered
immovables, and, hence, not subject to xxx xxx xxx
assessment as real estate for purposes of the
real estate tax. (5) Machinery, receptacles, instruments
or implements intended by the owner of
FACTS: the tenement for an industry or works
Petitioner is a public utility solely engaged in which may be carried on in a building or
transporting passengers and cargoes by motor on a piece of land, and which tend
trucks, over its authorized lines in the Island of directly to meet the needs of the said
Mindanao, collecting rates approved by the industry or works; (Civil Code of the
Public Service Commission. Phil.)

The petitioner is the owner of the land where it Aside from the element of essentiality the
maintains and operates a garage for its TPU above-quoted provision also requires that the
motor trucks; a repair shop; blacksmith and industry or works be carried on in a building or
carpentry shops, and with these machineries on a piece of land. Thus in the case of
which are placed therein, its TPU trucks are Berkenkotter vs. Cu Unjieng, supra, the
made; body constructed; and same are "machinery, liquid containers, and instruments
repaired in a condition to be serviceable in the or implements" are found in a building
TPU land transportation business it operates. constructed on the land. A sawmill would also
be installed in a building on land more or less
These machineries have never been or were permanently, and the sawing is conducted in
never used as industrial equipments to the land or building.
produce finished products for sale, nor to repair
machineries, parts and the like offered to the But in the case at bar the equipments in
general public indiscriminately for business or question are destined only to repair or service
the transportation business, which is not for the payment of taxes. (other than (i) taxes
carried on in a building or permanently on a imposed or calculated on the basis of the net
piece of land, as demanded by the law. Said income of POLAR and Personal Income Taxes
equipments may not, therefore, be deemed of its employees and (ii) construction permit
real property. fees, environmental permit fees and other
similar fees and charges. Polar Energy then
Resuming what we have set forth above, we assigned its rights under the Agreement to Fels
hold that the equipments in question are not despite NPC’s initial opposition.
absolutely essential to the petitioner's
transportation business, and petitioner's FELS received an assessment of real property
business is not carried on in a building, taxes on the power barges from Provincial
tenement or on a specified land, so said Assessor Lauro C. Andaya of Batangas City.
equipment may not be considered real estate FELS referred the matter to NPC, reminding it
within the meaning of Article 415 (c) of the Civil of its obligation under the Agreement to pay all
Code. real estate taxes. It then gave NPC the full
power and authority to represent it in any
Said equipments are not considered conference regarding the real property
immobilized as they are merely incidental, not assessment of the Provincial Assessor. NPC
essential and principal to the business of the filed a petition with the Local Board
petitioner. The transportation business could Assessment Appeals (LBAA). The LBAA
be carried on without repair or service shops of ordered Fels to pay the real estate taxes. The
its rolling equipment as they can be repaired or LBAA ruled that the power plant facilities, while
services in another shop belonging to another they may be classified as movable or personal
property, are nevertheless considered real
VCL IV property for taxation purposes because they
Fels Energy, Inc. v. Province of Batangas, are installed at a specific location with a
et al. character of permanency. The LBAA also
G.R. No. 168557 pointed out that the owner of the barges–
FELS, a private corporation–is the one being
DOCTRINE: Article 415 (9) of the New Civil taxed, not NPC. A mere agreement making
Code provides that “docks and structures NPC responsible for the payment of all real
which, though floating, are intended by their estate taxes and assessments will not justify
nature and object to remain at a fixed place on the exemption of FELS; such a privilege can
a river, lake, or coast” are considered only be granted to NPC and cannot be
immovable property. Thus, power barges are extended to FELS. Finally, the LBAA also ruled
categorized as immovable property by that the petition was filed out of time.
destination, being in the nature of machinery
and other implements intended by the owner Fels appealed to the Central Board
for an industry or work which may be carried Assessment Appeals (CBAA). The CBAA
on in a building or on a piece of land and which reversed and ruled that the power barges
tend directly to meet the needs of said industry belong to NPC; since they are actually, directly
or work. and exclusively used by it, the power barges
are covered by the exemptions under Section
FACTS: 234(c) of R.A. No. 7160. As to the other
On January 18, 1993, National Power jurisdictional issue, the CBAA ruled that
Corporation (NPC) entered into a lease prescription did not preclude the NPC from
contract with Polar Energy, Inc. over 3×30 MW pursuing its claim for tax exemption in
diesel engine power barges moored at Balayan accordance with Section 206 of R.A. No. 7160.
Bay in Calaca, Batangas. The contract, Upon MR, the CBAA reversed itself.
denominated as an Energy Conversion
Agreement, was for a period of five years. ISSUE: Whether or not barges are considered
Article 10 states that NPC shall be responsible as real property, thus can be subject to real
property tax -- YES contract providing that upon the
expiration or termination of such lease,
HELD: the following shall happen:
The CBAA and LBAA power barges are real o The ownership of all structures
property and are thus subject to real property and improvements introduced by
tax. the petitioner company shall be
transferred to the respondents
In Consolidated Edison Company of New York, without any cost or obligation to
Inc., et al. v. The City of New York, et al., a pay.
power company brought an action to review o The machines and their
property tax assessment. On the city’s motion accessories shall not be included
to dismiss, the Supreme Court of New York in said transfer.
held that the barges on which were mounted ● It was noted by the court that in a
gas turbine power plants designated to previous case between the two parties,
generate electrical power, the fuel oil barges judgment was rendered against the
which supplied fuel oil to the power plant petitioner company upon which a writ of
barges, and the accessory equipment mounted execution was brought against its
on the barges were subject to real property machines (as personalty) in favor of
taxation. Castilllo, et al.
● Additionally, the records of the
Moreover, Article 415 (9) of the New Civil Code current case reflected that the petitioner
provides that “docks and structures which, company had treated its machinery as
though floating, are intended by their nature personal property by executing chattel
and object to remain at a fixed place on a river, mortgages on them in favor of third
lake, or coast” are considered immovable persons.
property. Thus, power barges are categorized ● Petitioner company contends that
as immovable property by destination, being in its machines are immovable under the
the nature of machinery and other implements first and fifth paragraphs of Article 334
intended by the owner for an industry or work (now Article 415) of the Civil Code.
which may be carried on in a building or on a
piece of land and which tend directly to meet ISSUE:
the needs of said industry or work. W/N the machines of the petitioner company
are movable or immovable property.
FXRL
Davao Sawmill Co. v. Castillo HELD:
G.R. No. 40411, The machines are movable.

DOCTRINE: Generally, machinery becomes The court observed that the petitioner company
immobilized when placed by the owner of the failed to register its protest at the time its
plant or property. This rule does not apply machines were sold. Generally, this inaction
should the machinery be placed by any other would be inconclusive but it is indicative of the
person such as a tenant or usufructuary. intention impressed upon the property in
question.
FACTS:
● The petitioner company operates This is so because while machines are
a sawmill in barrio Tigatu, Davao. generally movable property, they may
● Said facility contained both nevertheless be “immobilized” by destination or
movable and immovable property purpose subject to several conditions.
(machines and other such implements).
● However, the land on which it is This conclusion finds its ground under the fifth
situated belongs to another person. paragraph of Article 415. Here, machinery
● The parties executed a lease becomes immobilized when placed by the
owner of the plant or property. This rule does of First Instance of Rizal.
not apply should the machinery be placed by
any other person such as a tenant or Acting on petitioner's application for replevin,
usufructuary. the lower court issued a writ of seizure, the
enforcement of which was however
Applying the rule to the case on hand, the subsequently restrained upon private
machinery was placed by the petitioner respondent's filing of a motion for
company who was merely a lessee. As such, reconsideration. After several incidents, the
the equipment was never immobilized in the lower court finally issued an order lifting the
first place. restraining order for the enforcement of the writ
of seizure and an order to break open the
RSDM premises of private respondent to enforce said
Makati Leasing and Financial Corporation v. writ. The lower court reaffirmed its stand upon
Wearever Textile Mills, Inc. private respondent's filing of a further motion
G.R. No. L-58469 for reconsideration.
The Court of Appeals, in certiorari and
DOCTRINE:If a house of strong materials, like prohibition proceedings subsequently filed by
what was involved in the above Tumalad case, herein private respondent, set aside the Orders
may be considered as personal property for of the lower court and ordered the return of the
purposes of executing a chattel mortgage drive motor seized by the sheriff pursuant to
thereon as long as the parties to the contract said Orders, after ruling that the machinery in
so agree and no innocent third party will be suit cannot be the subject of replevin, much
prejudiced thereby, there is absolutely no less of a chattel mortgage, because it is a real
reason why a machinery, which is movable in property pursuant to Article 415 of the new
its nature and becomes immobilized only by Civil Code, the same being attached to the
destination or purpose, may not be likewise ground by means of bolts and the only way to
treated as such. This is really because one remove it from respondent's plant would be to
who has so agreed is estopped from denying drill out or destroy the concrete floor, the
the existence of the chattel mortgage. reason why all that the sheriff could do to
enfore the writ was to take the main drive
FACTS: motor of said machinery. The appellate court
The private respondent Wearever Textile Mills, rejected petitioner's argument that private
Inc., discounted and assigned several respondent is estopped from claiming that the
receivables with the former under a Receivable machine is real property by constituting a
Purchase Agreement in order to obtain chattel mortgage thereon.
financial accommodations from herein
petitioner Makati Leasing and Finance ISSUE:
Corporation. To secure the collection of the Whether or not the property in suit is real
receivables assigned, private respondent property – NO. It is a personal property
executed a Chattel Mortgage over certain raw
materials inventory as well as a machinery HELD:
described as an Artos Aero Dryer Stentering Examining the records of the instant case, We
Range. find no logical justification to exclude the rule
out, as the appellate court did, the present
Upon default, petitioner filed a petition for case from the application of the abovequoted
extrajudicial foreclosure of the properties pronouncement. If a house of strong materials,
mortgage to it. The Deputy Sheriff assigned to like what was involved in the above Tumalad
implement the foreclosure failed to gain entry case, may be considered as personal property
into private respondent's premises and was not for purposes of executing a chattel mortgage
able to effect the seizure of the aforedescribed thereon as long as the parties to the contract
machinery. Petitioner thereafter filed a so agree and no innocent third party will be
complaint for judicial foreclosure with the Court prejudiced thereby, there is absolutely no
reason why a machinery, which is movable in
its nature and becomes immobilized only by Three steel towers were the subject of this
destination or purpose, may not be likewise dispute. When inspected, the findings disclose
treated as such. This is really because one that there was no concrete foundation but there
who has so agreed is estopped from denying was adobe stone underneath. Further, it could
the existence of the chattel mortgage. not be ascertained whether said adobe stone
was purposely or not.
In rejecting petitioner's assertion on the
applicability of the Tumalad doctrine, the Court From this, the City Assessor of Quezon City
of Appeals lays stress on the fact that the declared the steel towers subject to real
house involved therein was built on a land that property tax. MERALCO, however, protested
did not belong to the owner of such house. But the assessment saying that the steel towers
the law makes no distinction with respect to the are considered poles and according to their
ownership of the land on which the house is franchise, it is exempt from taxation
built and We should not lay down distinctions
not contemplated by law. ISSUE:
Whether or not the steel towers or poles of the
It must be pointed out that the characterization MERALCO are considered real properties,
of the subject machinery as chattel by the hence subject to real property tax?
private respondent is indicative of intention and
impresses upon the property the character HELD:
determined by the parties. As stated in The Supreme Court held in the negative. The
Standard Oil Co. of New York v. Jaramillo, 44 Court said that the steel towers are personal
Phil. 630, it is undeniable that the parties to a properties. The Court based their ruling on the
contract may by agreement treat as personal enumeration of immovable properties in Art.
property that which by nature would be real 415 of the Civil Code.
property, as long as no interest of third parties
would be prejudiced thereby. First, the steel towers do not come within the
objects mentioned in par. 1, because they do
MRAM not constitute buildings or constructions
Board of Assessment Appeals v. MERALCO adhered to the soil.Moreover, they are not
10 SCRA 68 construction analogous to buildings nor
adhering to the soil because as per description,
they are removable and merely attached to a
DOCTRINE: The steel towers or poles of square metal frame by means of bolts, which
MERALCO are not real properties because 1) when unscrewed could easily be dismantled
they are not adhered to the soil, 2) they are not and moved from place to place.
attached to an immovable property and can be
dismantled without breaking or deteriorating Second, they can not be included under
the material and 3) they are not machineries paragraph 3 since they are not attached to an
nor instruments or implements intended for the immovable in a fixed manner; they can be
industry or works on the land separated without breaking the material or
causing deterioration upon the object to which
FACTS: they are attached. In fact, each of these steel
Generated by its hydroelectric plant, towers or supports consists of steel bars joined
MERALCO’s electric power is transmitted from together by means of bolts, which can be
Laguna to Manila through electric transmission disassembled by unscrewing the bolts and
wires. These electric transmission wires which reassembled by screwing the same.
carry high voltage current, are fastened to
insulators attached on steel towers. MERALCO Lastly, they do not fall under paragraph 5, as
has constructed 40 of these steel towers within they are not machineries, receptacles,
Quezon City, on land belonging to it. instruments or implements. SC said that even if
they were machineries, receptacles, order.
instruments or implements, they are not
intended for industry or works on the land. ▪ Leonardo Contreras,
MERALCO is not engaged in an industry or herein Respondent Company’s Manager
works in the land in which the steel supports or met the sheriffs and handed the latter a
towers are constructed. letter addressed to Atty. Leopoldo C. Paled,
ex-officio Provincial Sheriff of Bulacan,
FMM signed by the Respondent Company’s
Machinery & Engineering Supplies, Inc. v. counsel, protesting against the seizure of
CA the properties on the ground that the same
G.R. No. L-7057 are not personal properties.

DOCTRINE: When the machinery and ▪ Roco and the deputy

equipment in question appeared to be attached sheriffs contended that their duty is
to the land, particularly to the concrete ministerial and went ahead to the factory.
foundation of said premises, in a fixed manner, At the factory, Rocco’s attention was called
in such a way that the former could not be to the fact that the equipment could not
separated from the latter "without breaking the possibly be dismantled without causing
material or deterioration of the object or that in damages or injuries to the wooden frames
order to remove said outfit, it became attached to them but Roco insisted in
necessary, not only to unbolt the same, but , dismantling the same on his own
also, to cut some of its wooden supports and responsibility and alleged that the bond was
when, said machinery and equipment were posted for such eventuality. Thus, the
"intended by the owner of the tenement for an deputy sheriffs directed that some of the
industry" carried on said immovable and machine’s supports be cut.
tended, it becomes immovable property
pursuant to paragraphs 3 and 5 of Article 415 ▪ On 20 March 1953, the
of Civil Code of the Philippines. Respondent Company filed an urgent
motion, with a counter-bond in the amount
FACTS: of P15,769 for the return of the properties
▪ On 13 March 1953, seized by the sheriffs. On the same day,
Machinery & Engineering Supplies, Inc. (the the trial court issued an order, directing the
“Petitioner”) filed a complaint for replevin in Provincial Sheriff of Bulacan to return the
the Court of First Instance (“CFI”) of Manila machinery and equipment to the place
for the recovery of the machinery and where they were installed at the time of
equipment sold and delivered to Ipo seizure.
Limestone Co., Inc and Dr. Antonio
Villarama (the “Respondents”) at their ▪ On 2 March 1953, the
factory in Barrio Bigti, Norzagaray, Bulacan. deputy sheriffs returned the said properties
by depositing them along the road near the
▪ Upon application ex-parte quarry of the Respondent Company,
of the Petitioner and upon approval of its without inventory and re-installation in its
bond sum of P15,769.00, herein former position and replacing the destroyed
Respondent Judge issued an order posts, which rendered its use impracticable.
directing the Provincial Sheriff of Bulacan to
seize and take immediate possession of the ▪ On 23 March 1953,
properties specified in the said order. Respondents’ counsel asked the provincial
sheriff if the machinery and equipment
▪ On 19 March 1953, two dumped on the road would be re-installed
deputy sheriffs of Bulacan, Ramon S. Roco to their former position and condition. The
and a crew of technician and laborers next day, the provincial sheriff filed an
proceeded to Bigti to carry out the CFI’s urgent motion in court manifesting the Roco
 had been asked to furnish the sheriff’s to the land, particularly to the concrete
office with the expenses, laborers, technical foundation of said premises, in a fixed manner,
men and equipment to carry into effect the in such a way that the former could not be
courts order, among other things but that separated from the latter "without breaking the
Roco absolutely refused and asking the material or deterioration of the object." Hence,
Court that Respondent Company be in order to remove said outfit, it became
ordered to provide the required aid or necessary, not only to unbolt the same, but,
relieve the sheriff of the duty of complying also, to cut some of its wooden supports.
to the said order. Moreover, said machinery and equipment were
"intended by the owner of the tenement for an
▪ On 30 March 1953, the industry" carried on said immovable and
trial court ordered the provincial sheriff and tended." For these reasons, they were already
the Petitioner Company to reinstate the immovable property pursuant to paragraphs 3
machinery and equipment removed by and 5 of Article 415 of Civil Code of the
them in their original condition. An urgent Philippines, which are substantially identical to
motion of the provincial sheriff dated 15 paragraphs 3 and 5 of Article 334 of the Civil
April 1953 requesting for an extension was Code of Spain. As such immovable property,
denied and on 4 May 1953, the trial court they were not subject to replevin.
ordered the Petitioner Company to furnish
the provincial sheriff with the necessary RGGM
funds and technical crew and laborers to Punsalan, Jr. v. Vda. De Lacsamana
reinstate the machinery and equipment. 121 SCRA 331

▪ The case was appealed DOCTRINE: Buildings are always immovable

before the Court of Appeals but the latter under the Civil Code. Separate treatment by
dismissed the same for lack of merit. the parties of building from the land in which it
stood does not change the immovable
▪ Hence this petition filed character of the building.
before the Supreme Court (the “SC”). The
Petitioner argued that the respondent judge FACTS:
had completely disregarded his Punsalan was the owner of a piece of land,
manifestation that the machinery and which he mortgaged in favor of PNB. Due to
equipment seized were and still are the his failure to pay, the mortgage was foreclosed
Petitioner's property until fully paid for and and the land was sold in a public auction to
such never became immovable. The which PNB was the highest bidder.
question of ownership and the applicability
of Art. 415 of the new Civil Code are On a relevant date, while Punsalan was still the
immaterial in the determination of the only possessor of the land, it secured a permit for
issue involved in this case. the construction of a warehouse.

ISSUE: A deed of sale was executed between PNB

Whether the machineries and equipments can and Punsalan. This contract was amended to
be considered as personal properties subject include the warehouse and the improvement
to replevin. -- NO thereon. By virtue of these instruments,
respondent Lacsamana secured title over the
HELD: property in her name.
The SC held that the special civil action known
as replevin, governed by Rule 62 of Court, is Petitioner then sought for the annulment of the
applicable only to "personal property". When deed of sale. Among his allegations was that
the sheriff repaired to the premises of the bank did not own the building and thus, it
respondent company, the machinery and should not be included in the said deed.
equipment in question appeared to be attached
Petitioner’s complaint was dismissed for said contract, "is good only insofar as the
improper venue. The trial court held that the contracting parties are concerned. It is based,
action being filed in actuality by petitioner is a partly, upon the principle of estoppel.”
real action involving his right over a real
property. FACTS:
On 1 September 1955 defendants executed a
ISSUE: chattel mortgage in favor of plaintiffs over their
Whether or not the warehouse is an immovable house located at Quiapo, Manila, which were
and must be tried in the province where the being rented from Madrigal & Company, Inc.
property lies. The mortgage was registered in the Registry of
Deeds of Manila on 2 September 1955. The
HELD: mortgage was executed to guarantee a loan of
Warehouse claimed to be owned by P4,800.00 received from plaintiffs. It was also
petitioner is an immovable or real property. agreed that default in the payment of any of the
Buildings are always immovable under the Civil amortizations, would cause the remaining
Code. A building treated separately from the unpaid balance to become immediately due
land on which it is stood is immovable property and Payable and the Chattel Mortgage will be
and the mere fact that the parties to a contract enforceable in accordance with the provisions
seem to have dealt with it separate and apart of Special Act No. 3135, and for this purpose,
from the land on which it stood did not change the Sheriff of the City of Manila or any of his
its character as immovable property. deputies is hereby empowered and authorized
to sell all the Mortgagor's property after the
MCSS necessary publication in order to settle the
Prudential Bank v. Panis financial debts of P4,800.00, plus 12% yearly
153 SCRA 390 interest, and attorney's fees.

FACTS: When defendants defaulted in paying, the

Plaintiff-spouses Magcale secured two loans mortgage was extrajudicially foreclosed, and
over a 2-storey residential building. the house was sold at public auction pursuant
to the said contract. As highest bidder, plaintiffs
For failure of the plaintiffs to pay their were issued the corresponding certificate of
obligation to defendant Bank after it became sale. Thereafter, plaintiffs commenced Civil
due, the deed of the Real Estate Mortgage Case No. 43073 in the municipal court of
were extrajudicially foreclosed. Manila, praying, among other things, that the
house be vacated and its possession
ISSUE: WON a valid real estate mortgage can surrendered to them, and for defendants to pay
be constituted on the building. -- YES rent of P200.00 monthly from 27 March 1956
up to the time the possession is surrendered.
HELD: MTC granted petition.
Inclusion of building separate and distinct from
land, in the provision of law can only mean that Defendants, in their answers in both the
a building is by itself an immovable property. A municipal court and court a quo impugned the
building by itself may be mortgaged apart from legality of the chattel mortgage, claiming that
the land on which it has been built. they are still the owners of the house. During
the pendency of the appeal to the Court of First
NKVS Instance, defendants failed to deposit the rent
Tumalad v. Vicencio as ordered in the decision of the municipal
41 SCRA 143 court. As a result, the court granted plaintiffs
motion for execution. However, the judgment
DOCTRINE: The view that parties to a deed of regarding the surrender of possession to
chattel mortgage may agree to consider a plaintiffs could not be executed because the
house as personal property for the purposes of subject house had been already demolished
pursuant to the order of the court in a separate predicated on statements by the owner
civil case for ejectment against the present declaring his house to be a chattel, a conduct
defendants for non-payment of rentals on the that may conceivably estop him from
land on which the house was constructed. subsequently claiming otherwise.

ISSUE: Although there is no specific statement

W/N the house may be a subject of a Chattel referring to the subject house as personal
Mortgage. – YES, it may be the subject of a property, yet by ceding, selling or transferring a
chattel mortgage. property by way of chattel mortgage
defendants could only have meant to convey
HELD: the house as chattel, or at least, intended to
Defendants predicate their theory of nullity of treat the same as such, so that they should not
the chattel mortgage on the ground that the now be allowed to make an inconsistent stand
subject matter of the mortgage is a house of by claiming otherwise.
strong materials, and, being an immovable, it Moreover, the subject house stood on a rented
can only be the subject of a real estate lot to which defendants merely had a
mortgage and not a chattel mortgage. temporary right as lessee, and although this
can not in itself alone determine the status of
The rule about the status of buildings as the property, it does so when combined with
immovable property is that it is obvious that the other factors to sustain the interpretation that
inclusion of the building, separate and distinct the parties, particularly the mortgagors,
from the land, in the enumeration of what may intended to treat the house as personalty.
constitute real properties could only mean one Finally, because it is the defendants
thing — that a building is by itself an themselves, as debtors-mortgagors, who are
immovable property irrespective of whether or attacking the validity of the chattel mortgage in
not said structure and the land on which it is this case, the doctrine of estoppel therefore
adhered to belong to the same owner. applies to the defendants, having treated the
subject house as personalty.
It is undeniable that the parties to a contract
may by agreement treat as personal property AMPS
that which by nature would be real property. Serg’s Products and Goquiola v. PCI
The view that parties to a deed of chattel Leasing and Finance
mortgage may agree to consider a house as 338 SCRA 499
personal property for the purposes of said
contract, "is good only insofar as the DOCTRINE: After agreeing to a contract
contracting parties are concerned. It is based, stipulating that a real or immovable property be
partly, upon the principle of estoppel.” considered as personal or movable, a party is
estopped from subsequently claiming
In a case, a mortgaged house built on a rented otherwise. Hence, such property is a proper
land was held to be a personal property, not subject of a writ of replevin obtained by the
only because the deed of mortgage considered other contracting party.
it as such, but also because it did not form part
of the land for it is now settled that an object FACTS:
placed on land by one who had only a PCI Leasing and Finance, Inc. filed a complaint
temporary right to the same, such as the with the RTC for a sum of money with an
lessee or usufructuary, does not become application for a writ of replevin. Upon an ex-
immobilized by attachment. Hence, if a house parte application of PCI Leasing, respondent
belonging to a person stands on a rented land judge issued a writ of replevin directing its
belonging to another person, it may be sheriff to seize and deliver the machineries and
mortgaged as a personal property as so equipment to PCI Leasing after 5 days and
stipulated in the document of mortgage. It upon the payment of the necessary expenses.
should be noted, however that the principle is
Serg’s filed a motion for special protective to take such property into his
order. This motion was opposed by PCI custody.”
Leasing on the ground that the properties
[were] still personal and therefore still subject On the other hand, Article 415 of the Civil Code
to seizure and a writ of replevin. enumerates immovable or real property as
follows:
In their Reply, petitioners asserted that the
properties sought to be seized were immovable “ART. 415. The following are
as defined in Article 415 of the Civil Code, the immovable property:
parties’ agreement to the contrary x x x....................................x x
notwithstanding. They argued that to give x....................................x x x
effect to the agreement would be prejudicial to
innocent third parties. They further stated that (5) Machinery, receptacles,
PCI Leasing was estopped from treating these instruments or implements
machineries as personal because the contracts intended by the owner of the
in which the alleged agreement were embodied tenement for an industry or works
were totally sham and farcical. which may be carried on in a
building or on a piece of land,
Citing the Agreement of the parties, the and which tend directly to meet
appellate court held that the subject machines the needs of the said industry or
were personal property, and that they had only works;
been leased, not owned, by petitioners. It also
ruled that the “words of the contract are clear x x x....................................x x
and leave no doubt upon the true intention of x....................................x x x”
the contracting parties.”
In the present case, the machines that were
ISSUE: the subjects of the Writ of Seizure were placed
Whether or not the machineries purchased and by petitioners in the factory built on their own
imported by SERG’S became real property by land. Indisputably, they were essential and
virtue of immobilization. principal elements of their chocolate-making
industry. Hence, although each of them was
HELD: movable or personal property on its own, all of
The machineries herein are real properties but them have become “immobilized by destination
are considered personal by the parties’ because they are essential and principal
agreement. elements in the industry.” In that sense,
petitioners are correct in arguing that the said
The Court will resolve whether the said machines are real, not personal, property
machines are personal, not immovable, pursuant to Article 415 (5) of the Civil Code.
property which may be a proper subject of a
writ of replevin. Rule 60 of the Rules of Court Be that as it may, we disagree with the
provides that writs of replevin are issued for the submission of the petitioners that the said
recovery of personal property only. Section 3 machines are not proper subjects of the Writ of
thereof reads: Seizure.

“SEC. 3. Order. -- Upon the The Court has held that contracting parties
filing of such affidavit and may validly stipulate that a real property be
approval of the bond, the court considered as personal. After agreeing to such
shall issue an order and the stipulation, they are consequently estopped
corresponding writ of replevin from claiming otherwise. Under the principle of
describing the personal property estoppel, a party to a contract is ordinarily
alleged to be wrongfully detained precluded from denying the truth of any
and requiring the sheriff forthwith material fact found therein.
 Instance held that although real property may
Hence, in Tumalad v. Vicencio, the Court sometimes be considered as personal
upheld the intention of the parties to treat a property, the sheriff was in duty bound to
house as a personal property because it had cause the publication of the notice of its sale in
been made the subject of a chattel mortgage. order to make the sale valid or to prevent its
being declared void or voidable.
It should be stressed, however, that our
holding -- that the machines should be deemed ISSUE:
personal property pursuant to the Lease Can the house of Manarang be classified as
Agreement – is good only insofar as the personal property since it was considered as
contracting parties are concerned. Hence, such in a chattel mortgage? -- NO
while the parties are bound by the Agreement,
third persons acting in good faith are not
affected by its stipulation characterizing the HELD:
subject machinery as personal. In any event, The house of mixed materials levied upon on
there is no showing that any specific third party execution, although subject of a contract of
would be adversely affected. chattel mortgage between the owner and a
third person, is real property within the purview
KGS of Rule 39, section 16, of the Rules of Court as
Manarang and Manarang v. Ofilada and it has become a permanent fixture on the land,
Esteban which is real property.
99 SCRA 108
There cannot be any question that a building of
DOCTRINE: House is personal property for mixed materials may be the subject of a chattel
purposes of chattel mortgage only; Remains mortgage, in which case it is considered as
real property. The mere fact that a house was between the parties as personal property. The
the subject of a chattel mortgage and was matter depends on the circumstances and the
considered as personal property by the parties intention of the parties.
does not make said house personal property
for purposes of the notice to be given for its The general principle of law is that a building
sale at public auction. It is real property within permanently fixed to the freehold becomes a
the purview of Rule 39, section 16, of the Rules part of it, that prima facie a house is real
of Court as it has become a permanent fixture estate, belonging to the owner of the land on
on the land, which is real property. which it stands, even though it was erected
against the will of the landowner, or without his
FACTS: consent. The general rule is otherwise,
Manarang obtained a loan from Esteban, and however, where the improvement is made with
executed a chattel mortgage over a house of the consent of the landowner, and pursuant to
mixed materials as a security. Upon default, an understanding either expressed or implied
Estaban brought an action to foreclose the that it shall remain personal property. Nor does
property mortgaged. At Manarang’s request, the general rule apply to a building, which is
the house mortgaged was to be sold at public wrongfully removed from the land and placed
auction to satisfy the debt. However, before the on the land of the person removing it.
property could be sold, Manarang offered to
pay the sum. But the sheriff refused the tender Among the principal criteria for determining
unless the additional amount is also paid whether property remains personally or
representing the publication of the notice in two becomes realty are annexation to the soil,
newspapers. Manarang contended that the either actual or construction, and the intention
house in question should be considered as of the parties. Personal property may retain its
personal property and the publication of the character as such where it is so agreed by the
notice of its sale at public auction in execution parties interested even though annexed to the
considered unnecessary. The Court of First realty, or where it is affixed in the soil to be
used for a particular purpose for a short period Navarro, the sum of P2,500.00, payable 6
and then removed as soon as it has served its months after said date or on June 14, 1959. To
purpose. secure the indebtedness, Rufino executed a
document captioned "DEED OF REAL
ESTATE and CHATTEL MORTGAGES",
These considerations notwithstanding, we hold whereby Juana Gonzales, by way of Real
that the rules on execution do not allow, and Estate Mortgage hypothecated a parcel of
we should not interpret them in such a way as land, belonging to her, registered with the
to allow, the special consideration that parties Register of Deeds of Tarlac, under Transfer
to a contract may have desired to impart to real Certificate of Title No. 25776, and Rufino G.
estate, for example, as personal property, Pineda, by way of Chattel Mortgage,
when they are not ordinarily so. Sales on mortgaged his two-story residential house,
execution affect the public and third persons. having a floor area of 912 square meters,
The regulation governing sales on execution erected on a lot belonging to Atty. Vicente
are for public officials to follow. The form of Castro, located at Bo. San Roque, Tarlac,
proceedings prescribed for each kind of Tarlac; and one motor truck, registered in his
property is suited to its character, not to the name, under Motor Vehicle Registration
character which the parties have given to it or Certificate No. A-171806. Both mortgages
desire to give it. When the rules speak of were contained in one instrument, which was
personal property, property which is ordinarily registered in both the Office of the Register of
so considered is meant; and when real Deeds and the Motor Vehicles Office of Tarlac.
property is spoken of, it means property which
is generally known as real property. The After failing to settle amount due, respondent
regulations were never intended to suit the was then granted an extension on June
consideration that parties, may have privately 30,1960 and consequently July 30th of the
given to the property levied upon. Enforcement same year for still being unable to comply.
of regulations would be difficult were the Rufino Pineda then issued a document entitled
convenience or agreement of private parties to "Promise," stating that defendant would no
determine or govern the nature of the longer ask for further extension and there
proceedings. We, therefore, hold that the mere would be no need for any formal demand, and
fact that a house was the subject of a chattel plaintiff could proceed to take whatever action
mortgage and was considered as personal he might desire to enforce his rights, under the
property by the parties does not make said said mortgage contract.
house personal property for purposes of the
notice to be given for its sale at public auction. On August 10, 1960, plaintiff filed a complaint
This ruling is demanded by the need for a for foreclosure of the mortgage and for
definite, orderly and well-defined regulation for damages, which consisted of liquidated
official and public guidance and which would damages in the sum of P500.00 and 12% per
prevent confusion and misunderstanding annum interest on the principal, effective on
JPOT the date of maturity, until fully paid. Defendants
Navarro v. Pineda admit that the loan is overdue but deny that
9 SCRA 631 portion of paragraph 4 of the First Cause of
Action which states that the defendants
DOCTRINE:Estoppel, in that "the parties have unreasonably failed and refuse to pay their
so expressly agreed" in the mortgage to obligation to the plaintiff the truth being the
consider the house as chattel "for its smallness defendants are hard up these days and
and mixed materials of sawali and wood". pleaded to the plaintiff to grant them more time
within which to pay their obligation and the
FACTS: plaintiff refused;
December 14, 1959, Rufino G. Pineda and his
mother Juana Gonzales (married to Gregorio WHEREFORE, in view of the foregoing it is
Pineda), borrowed from plaintiff Conrado P. most respectfully prayed that this Honorable
Court render judgment granting the defendants Assessment Appeals
until January 31, 1961, within which to pay 114 SCRA 273
their obligation to the plaintiff.
DOCTRINE:Oil storage tanks were held to be
November 11, 1960, however, the parties taxable realty. For purposes of taxation, the
submitted a Stipulation of Facts, wherein the term "real property" may include things which
defendants admitted the indebtedness, the should generally be regarded as personal
authenticity and due execution of the Real property.
Estate and Chattel Mortgages; that the
indebtedness has been due and unpaid since FACTS:
June 14, 1960; that a liability of 12% per The case is about the imposition of the realty
annum as interest was agreed, upon failure to tax on two oil storage tanks installed in 1969 by
pay the principal when due and P500.00 as Manila Electric Company in Batangas which it
liquidated damages; that the instrument had leased in 1968 from Caltex (Phil.), Inc. The
been registered in the Registry of Property and tanks are within the Caltex refinery compound,
Motor Vehicles Office, both of the province of and are used for storing fuel oil for Meralco's
Tarlac. power plants.

ISSUE: According to Meralco, the storage tanks are

W/N the residential house, subject of the made of steel plates welded and assembled on
mortgage therein, can be considered a Chattel the spot. Their bottoms rest on a foundation
and the propriety of the attorney's fees. consisting of compacted earth as the
outermost layer, a sand pad as the
HELD: intermediate layer and a two-inch thick
The court ruled "a property may have a bituminous asphalt stratum as the top layer.
character different from that imputed to it in The bottom of each tank is in contact with the
said articles. It is undeniable that the parties to asphalt layer. Hence, it is not attached to its
a contract may by agreement, treat as foundation.
personal property that which by nature would
be real property" (Standard Oil Co. of N.Y. v. On the other hand, according to the hearing
Jaranillo, 44 Phil. 632-633)."There can not be commissioners of the Central Board of
any question that a building of mixed materials Assessment Appeals (CBAA) states that while
may be the subject of a chattel mortgage, in the tanks rest or sit on their foundation, the
which case, it is considered as between the foundation itself and the walls, dikes and steps,
parties as personal property. ... The matter which are integral parts of the tanks, are
depends on the circumstances and the affixed to the land while the pipelines are
intention of the parties". "Personal property attached to the tanks.
may retain its character as such where it is so
agreed by the parties interested even though The CBAA ruled that the tanks together with
annexed to the realty ...". (42 Am. Jur. 209- the foundation, walls, dikes, steps, pipelines
210, cited in Manarang, et al. v. Ofilada, et al., and other appurtenances constitute taxable
G.R. No. L-8133, May 18, 1956; 52 O.G. No. 8, improvements.
p. 3954.) Moreover, the court continues and
makes plain that it "is good only insofar as the Meralco filed a motion for reconsideration
contracting parties are concerned. It is based which the Board denied. They elevated the
partly, upon the principles of estoppel ..." case to the SC.
(Evangelista v. Alto Surety, No. L-11139, Apr.
23, 1958). WHEREBY, previous judgment is ISSUE:
hereby AFFIRMED costs against appelant. WON the storage tanks are considered
“improvements” on real property such that it is
MLAV subject to real property tax. -- YES
Manila Electric Co., v. Central Board of
HELD: degree of permanence as receptacles for the
Meralco contends that the said oil storage considerable quantities of oil needed by
tanks do not fall within any of the kinds of real Meralco for its operations.
property enumerated in article 415 of the Civil
Code and, therefore, they cannot be Oil storage tanks were held to be taxable realty
categorized as realty by nature, by in Standard Oil Co. of New Jersey vs. Atlantic
incorporation, by destination nor by analogy. City, 15 Atl. 2nd 271.
Stress is laid on the fact that the tanks are not
attached to the land and that they were placed For purposes of taxation, the term "real
on leased land, not on the land owned by property" may include things which should
Meralco. generally be regarded as personal property. It
is a familiar phenomenon to see things classed
The issue raised by Meralco has to be resolved as real property for purposes of taxation which
in the light of the provisions of the Assessment on general principle might be considered
Law, Commonwealth Act No. 470, and the personal property (Standard Oil Co. of New
Real Property Tax Code, Presidential Decree York vs. Jaramillo, 44 Phil. 630, 633).
No. 464 which took effect on June 1, 1974.
DJTV
Section 2 of the Assessment Law provides that Caltex Philippines v. Central Board of
the realty tax is due "on real property, including Assessment Appeals
land, buildings, machinery, and other 114 SCRA 296
improvements" not specifically exempted in
section 3 thereof. This provision is reproduced DOCTRINE: Gasoline station equipment and
with some modification in the Real Property machineries are permanent fixtures for
Tax Code which provides: purposes of realty taxation.
Sec. 38. Incidence of Real Property
Tax. — They shall be levied, assessed FACTS:
and collected in all provinces, cities and Machines and equipment are loaned by Caltex
municipalities an annual ad valorem tax to gas station operators under an appropriate
on real property, such as land, lease agreement or receipt. It is stipulated in
buildings, machinery and other the lease contract that the operators, upon
improvements affixed or attached to real demand, shall return to Caltex the machines
property not hereinafter specifically and equipment in good condition as when
exempted. received, ordinary wear and tear excepted.

The Code contains the following definition in its The city assessor of Pasay City characterized
section 3: the said items of gas station equipment and
k) Improvements — is a valuable machinery as taxable realty. The city board of
addition made to property or an tax appeals ruled that they are personalty. The
amelioration in its condition, amounting assessor appealed to the Central Board of
to more than mere repairs or Assessment Appeals.
replacement of waste, costing labor or
capital and intended to enhance its The Board said machines and equipment are
value, beauty or utility or to adapt it for real property within the meaning of sections
new or further purposes. 3(k) & (m) and 38 of the Real Property Tax
Code, Presidential Decree No. 464, which took
The SC holds that while the two storage tanks effect on June 1, 1974, and that the definitions
are not embedded in the land, they may, of real property and personal property in
nevertheless, be considered as improvements articles 415 and 416 of the Civil Code are not
on the land, enhancing its utility and rendering applicable to this case.
it useful to the oil industry. It is undeniable that
the two tanks have been installed with some Caltex filed this certiorari petition wherein it
prayed for the setting aside of the Board's FACTS:
decision and for a declaration that t he said Philippine Refining Co., Inc., and Jarque
machines and equipment are personal property executed three chattel mortgages on the motor
not subject to realty tax. vessels Pandan and Zaragoza. Neither of the
first two mortgages had appended an affidavit
ISSUE: of good faith. The third mortgage contained
Whether or not Gasoline station equipment and such an affidavit, but this mortgage was not
machineries are permanent fixtures for registered in the customs house within the
purposes of realty taxation. -- YES period of thirty days prior to the
commencement of insolvency proceedings
HELD: against Jarque. A fourth mortgage was
The Supreme Court held that gasoline station executed and was entered in the chattel
equipment and machineries are permanent mortgage registry of the register of deeds
fixtures for purposes of realty taxation. Thus, within the thirty-day period before the institution
they are subject to the real property tax. The of insolvency proceedings. CFI declared
said equipment and machinery, as Jarque to be an insolvent debtor. As a result,
appurtenances to the gas station building or all his properties were assigned to Corominas.
shed owned by Caltex (as to which it is subject CFI Judge declined to order the foreclosure of
to realty tax) and which fixtures are necessary the mortgages, but on the contrary sustained
to the operation of the gas station, for without the special defenses of fatal defectiveness of
them the gas station would be useless, and the mortgages.
which have been attached or affixed
permanently to the gas station site or ISSUES:
embedded therein, are taxable improvements 1. WON the vessels are considered as
and machinery within the meaning of the personal property and can be the
Assessment Law and the Real Property Tax subject of Chattel Mortgage. Yes
Code. 2. WON the Chattel Mortgages are valid.
No.
The Central Board of Assessment Appeals did
not commit a grave abuse of discretion in HELD:
upholding the city assessor's is imposition of Vessels are considered personal property
the realty tax on Caltex's gas station and under the civil law. Similarly under the common
equipment. law, vessels are personal property although
occasionally referred to as a peculiar kind of
WHEREFORE, the questioned decision and personal property. Since the term "personal
resolution of the Central Board of Assessment property" includes vessels, they are subject to
Appeals are affirmed. The petition for certiorari mortgage agreeably to the provisions of the
is dismissed for lack of merit. Chattel Mortgage Law. Indeed, it has
heretofore been accepted without discussion
JGY that a mortgage on a vessel is in nature a
Phil. Refining Co., Inc. v. Jarque chattel mortgage. The only difference between
G.R. No. 41506 a chattel mortgage of a vessel and a chattel
mortgage of other personalty is that it is not
DOCTRINE: Vessels are considered personal now necessary for a chattel mortgage of a
property under the civil law. Similarly under the vessel to be noted n the registry of the register
common law, vessels are personal property of deeds, but it is essential that a record of
although occasionally referred to as a peculiar documents affecting the title to a vessel be
kind of personal property. Since the term entered in the record of the Collector of
"personal property" includes vessels, they are Customs at the port of entry. Otherwise a
subject to mortgage agreeably to the mortgage on a vessel is generally like other
provisions of the Chattel Mortgage Law. chattel mortgages as to its requisites and
validity.
 a better right than Rubiso over the pilot boat.
The Chattel Mortgage Law in its section 5, in
describing what shall be deemed sufficient to Ships and vessels, whether moved by
constitute a good chattel mortgage, includes steam or by sail, partake, to a certain
the requirement of an affidavit of good faith extent of the nature and conditions of real
appended to the mortgage and recorded property, on account of their value and
therewith. The absence of the affidavit vitiates importance in world commerce; and for this,
a mortgage as against creditors and the provisions of the Code of Commerce are
subsequent encumbrancers. As a nearly identical with Article 1473 of the Civil
consequence a chattel mortgage of a vessel Code
wherein the affidavit of good faith required by
the Chattel Mortgage Law is lacking, is ABB
unenforceable against third persons. U.S. v. Carlos
21 Phil. 553
JRPA
Rubiso v. Rivera DOCTRINE: The true test of what constitutes
37 Phil 72 the proper subject of [theft] is not whether the
subject is corporeal or incorporeal, but whether
DOCTRINE:The requisite of registration in the it is capable of appropriation by another other
registry, of the purchase of the vessel, is than the owner.
necessary and indispensable in order that
the purchaser’s rights may be maintained FACTS:
against a third person. Ignacio Carlos has been a consumer of
electricity furnished by MERALCO for a
FACTS: building containing the residence of the
Rubiso filed a complaint against Rivera for the accused and 3 other residences.
recovery of a pilot boat. He alleged that he is Representatives of the company believing that
the rightful owner of a pilot boat, which more light is consumed than what is shown in
was stranded and recovered by Rivera. The the meter installed an additional meter on the
latter refused to return the said boat as he pole outside Carlos’ house to compare the
alleged too that he was the owner thereof. actual consumption and found out that a
jumper was used to manipulate the readings of
It was known that the original owners of the the first meter. Further, a jumper was found in
boat had secretly sold the pilot boat to Rivera a drawer of a small cabinet in the room of the
on an earlier date than the sale in a public defendant’s house where the meter was
auction to Rubiso. Nonetheless, material is the installed. In the absence of any explanation for
fact that the entry into the customs registry of Carlos’ possession of said device, the
the sale of the boat was later than the presumption raised was that Carlos was the
recording of the sale to Rubiso. owner of the device whose only use was to
deflect the current from the meter. Thus, he
ISSUE: was charged with the crime of theft amounting
WON it is Rubiso or Rivera who has a better to 2,273KW of electric power worth 909.20
right to the boat? -- Rubiso has a better right pesos.

HELD: Carlos claimed that what he did failed to

The requisite of registration in the registry, of constitute an offense because the crime of
the purchase of the vessel, is necessary and theft applies only to tangibles, chattels and
indispensable in order that the purchaser’s objects that can be taken into possession.
rights may be maintained against a third
person. Such registration is required Deliberation quickly followed at the court which
both by the Code of Commerce and Act 1900. subsequently sentenced him to over a year in
It is undeniable, ergo, that Rivera doesn’t have jail. Carlos contested saying that electrical
energy can’t be stolen because of its nature of affirmed. David was ordered to pay and the
being incorporeal. He filed an appeal on such house was levied upon. To prevent the sale at
grounds which the CFI affirmed. the public auction, Piansay and Uy Kim filed a
petition for
ISSUE: certiorari and mandamus with preliminary
Whether or not theft can be committed against injunction before the CA; it was denied.
an intangible such as electricity. -- YES
Subsequently, Piansay and Uy Kim instituted
HELD: an action against David and Mangubat praying
Theft of incorporeal objects is possible. The that judgment be rendered declaring Piansay
right of ownership of electrical current was as the true owner and restrain the levy and
secured by Art 517 and 518 of the Penal Code sale to public auction. David demanded from
which applies to gas. Piansay the payment of the rentals for the use
and occupation of the house; the latter claims it
Analogically, electricity can be considered as is his property. Mangubat, on one hand, moved
‘gas’ which can be stolen. However, the true to dismiss the complaint on the ground of res
test of what constitutes the proper subject of adjudicata and lackof personality to sue; it was
larceny is not whether the subject is corporeal granted. CA affirmed explaining that Uy Kim
or incorporeal, but whether it is capable of had no right to foreclose the chattel mortgage
appropriation by another other than the owner. because it was in reality a mere contract of an
It is a valuable article of merchandise, a force unsecured loan. Piansay assailed Mangubat's
of nature brought under the control of science right to levy execution upon the house alleging
(under Art. 416 of the New Civil Code). Carlos that the same belongs to him, he having
secretly and with intent to deprive the company bought it from Uy Kim who acquired it at the
of its rightful property, used jumper cables to auction sale.
appropriate the same for his own use. Such
acts constitute theft. ISSUE:
WON the chattel mortgage and sale are valid -
FZC NO
Piansay v. David
12 SCRA 227 HELD:
Upon the theory that the chattel mortgage and
DOCTRINE: regardless of the validity of a sale in favor of Uy Kim had been annulled in
contract constituting a chattel mortgage on a the original decision, as affirmed by the CA, the
house, the same cannot and does not bind fact is that said order became final and
third persons, who are not parties to the executory upon the denial of the petition for
contract of their privies. certiorari and mandamus. Hence, Uy Kim and
Piansay are now barred from asserting that the
FACTS: chattel mortgage and sale are valid. At any
David obtained a loan from Uy Kim secured rate, regardless of the validity of a contract
with a chattel mortgage on a house in Tondo. constituting a chattel mortgage on a house, as
David failed to pay, thus was Kim foreclosed. between the parties to said contract, the same
Kim then bought the house at the resulting cannot and does not bind third persons, who
public auction. Thereafter, Kim sold the same are not parties to the contract of their privies.
to Marcos Mangubat, who later filed a As a consequence, the sale of the house in
complaint against David for the collection of a question in the proceedings for the
portrion of the loan. The complaint was later extrajudicialforeclosure of said chattel
amended to implead Uy Kim and Piansay mortgage, is null and void insofar as defendant
praying that the auction sale and deed of Mangubat is concerned, anddid not confer
absolute sale executed by Uy Kim in favor of upon Uy Kim, as buyer in said sale, any
Piansay be annulled. CFI Manila ordered David dominical right in and to said house, so that
to pay and annulled the chattel mortgage. CA shecould not have transmitted to her assignee
Piansay any such right as against Mangubat. for cooking in the quarters occupied by the
In short, they donot have a cause of action defendant and his wife: to effect which a short
against Mangubat and David piece of iron pipe had been inserted in the gap
where the gas meter had formerly been placed,
LNAC and piece of rubber tubing had been used to
U.S. v. Tambunting connect the gas pipe of rubber tubing had been
41 Phil 364 used to connect the gas pipe in kitchen with
the gas stove, or plate, used for cooking.
DOCTRINE: There is nothing in the nature of
gas used for illuminating purposes which At the time this discovery was made, accused
renders it incapable of being feloniously taken Tambunting was not at home. However, he
and carried away. It is a valuable article of presently arrived and admitted to the agent to
merchandise, bought and sold like other the gas company that he had made the
personal property, susceptible of being connection with the rubber tubing between the
severed from a mass or larger quantity and of gas pipe and the stove, though he denied
being transported from place to place. Likewise making the connection below. He also admitted
water which is confined in pipes and electricity that he knew he was using gas without the
which is conveyed by wires are subjects of knowledge of the company and that he had
larceny. been so using it for probably two or three
months.
FACTS:
This appeal was instituted for the purpose of The clandestine use of gas by the accused in
reversing a judgment of the CFI, finding the the manner stated is thus established in our
accused, Manuel Tambunting, guilty of stealing opinion beyond a doubt; and inasmuch as the
a quantity of gas belonging to the Manila Gas animo lucrandi is obvious.
Corporation, and sentencing him to undergo
imprisonment with the accessories prescribed ISSUE:
by law; to indemnify the said corporation, with Whether gas can be the subject to larceny. --
subsidiary imprisonment in case of insolvency; YES
and to pay the costs.
HELD:.
The evidence submitted in behalf of the The right of the ownership of electric current is
prosecution shows that in January of the year secured by article 517 and 518 of the Penal
1918, the accused and his wife became Code; the application of these articles in cases
occupants of the upper floor of the house of subtraction of gas, a fluid used for lighting,
situated at No. 443, Calle Evangelista, Manila. and in some respects resembling electricity, is
In this house the Manila Gas Corporation had confirmed by the rule laid down in the
previously installed apparatus for the delivery decisions of the SC of Spain, construing and
of gas on both the upper and lower floors, enforcing the provisions of articles 530 and 531
consisting of the necessary piping and a gas of the Penal Code of that country, articles
meter, which last mentioned apparatus was identical with articles 517 and 518 of the code
installed below. When the occupants at whose in force in these Islands. These expressions
request this installation had been made were used in a case which involved the
vacated the premises, the gas company subtraction and appropriation of electrical
disconnected the gas pipe and removed the energy and the court held, in accordance with
meter, thus cutting off the supply of gas from the analogy of the case involving the theft of
said premises. gas, that electrical energy could also be the
subject of theft.
Upon June 2, 1919, one of the inspectors of
the gas company visited the house in question In this connection it will suffice to quote the
and found that gas was being used, without the following from the topic "Larceny," at page 34,
knowledge and consent of the gas company, Vol. 17, of Ruling Case Law: There is nothing
in the nature of gas used for illuminating the enumeration of real properties under Article
purposes which renders it incapable of being 335 of the Civil Code. Thus, interest in
feloniously taken and carried away. It is a business may be subject of mortgage.
valuable article of merchandise, bought and
sold like other personal property, susceptible of In this case, the mortgaged property of one-
being severed from a mass or larger quantity half interest in the drug business in favor of
and of being transported from place to place. Fidelity and Surety Co. is a valid subject of
Likewise water which is confined in pipes and mortgage.
electricity which is conveyed by wires are
subjects of larceny. AMD
Laurel v. Abrogar
TKDC G.R. No. 155076
Involuntary Insolvency of Strochecker v.
Ramirez DOCTRINE: Telecommunication services and
44 Phil. 933 the business of providing said services are not
personal properties and cannot be subject to
DOCTRINE: All personal properties may be Article 308 of the Revised Penal Code
mortgaged. Interest in business is personal
property capable of appropriation and not Services in business, although properties, are
included in the enumeration of real properties not proper subjects of theft under the Revised
under Article 335 of the Civil Code. Thus, Penal Code because the same cannot be
interest in business may be subject of "taken" or "occupied".
mortgage.
FACTS:
FACTS: PLDT claims that Luis Marcos P. Laurel, board
Three mortgages seek preference in the lower member and corporate secretary of Baynet
court: one in favor of Fidelity and Surety Co., Co., Ltd., stole and used the international long
another in favor of Ramirez, and the last one in distance calls belonging to PLDT by
favor of Ayala. Ayala’s claim was rejected by conducting International Simple Resale (ISR) –
trial court from which she didn’t appeal. a method of routing and completing
international long distance calls using lines,
As to the time of the mortgages, the one in cables, antennae, and/or air wave frequency
favor of Fidelity and Surety Co. is preferred which connect directly to the local or domestic
because it was executed and registered in the exchange facilities of the country where the call
registry of property prior to that of Ramirez’s. is destined. PLDT alleged that such business
However, Ramirez claimed that the mortgage was effectively stolen while using their facilities
in favor of Fidelity and Surety Co. is invalid leading to great damage and prejudice
because the property, the half interest in the amounting to P20,370,651.92.
drug business, is incapable of being
mortgaged. Trial court ruled that the mortgage Laurel however alleged that the allegations do
in favor of Fidelity and Surety Co. is entitled to not constitue the felony of theft under Article
preference. 308 of the RPC or any special law. He claimed
that, telephone calls with the use of PLDT
ISSUE: telephone lines, whether domestic or
Whether or not one-half interest in the international, belong to the persons making the
business is capable of being mortgaged. -- call, not to PLDT. He argued that the caller
YES merely uses the facilities of PLDT, and what
the latter owns are the telecommunication
HELD: infrastructures or facilities through which the
All personal properties may be mortgaged. call is made. He also asserted that PLDT is
Interest in business is personal property compensated for the caller’s use of its facilities
capable of appropriation and not included in by way of rental; for an outgoing overseas call,
PLDT charges the caller per minute, based on word "take" in the law. The statutory definition
the duration of the call. Thus, no personal of "taking" and movable property indicates that,
property was stolen from PLDT. clearly, not all personal properties may be the
proper subjects of theft. The general rule is
The prosecution asserted that the use of that, only movable properties which have
PLDT’s intangible telephone services/facilities physical or material existence and susceptible
allows electronic voice signals to pass through of occupation by another are proper objects of
the same, and ultimately to the called party’s theft.
number. It averred that such service/facility is
akin to electricity which, although an intangible According to Cuello Callon, in the context of
property, may, nevertheless, be appropriated the Penal Code, only those movable properties
and be the subject of theft. The prosecution which can be taken and carried from the place
further alleged that "international business calls they are found are proper subjects of theft.
and revenues constitute personal property Intangible properties such as rights and ideas
envisaged in Article 308 of the Revised Penal are not subject of theft because the same
Code." Moreover, the intangible telephone cannot be "taken" from the place it is found and
services/facilities belong to PLDT and not to is occupied or appropriated.
the movant and the other accused, because
they have no telephone services and facilities Gas and electrical energy should not be
of their own duly authorized by the NTC; thus, equated with business or services provided by
the taking by the movant and his co-accused of business entrepreneurs to the public. Business
PLDT services was with intent to gain and does not have an exact definition. Business is
without the latter’s consent. referred as that which occupies the time,
attention and labor of men for the purpose of
ISSUE: livelihood or profit. It embraces everything that
W/N telephone calls placed by Bay Super which a person can be employed. Business
Orient Card holders through the may also mean employment, occupation or
telecommunication services provided by PLDT profession. Business is also defined as a
are considered as personal property, and thus, commercial activity for gain benefit or
proper subjects of theft under Article 308 of the advantage. Business, like services in business,
Revised Penal Code. -- NO although are properties, are not proper
subjects of theft under the Revised Penal Code
HELD: because the same cannot be "taken" or
The court finds that the international telephone "occupied."
calls placed by Bay Super Orient Card holders,
the telecommunication services provided by PLDT does not acquire possession, much less,
PLDT and its business of providing said ownership of the voices of the telephone
services are not personal properties under callers or of the electronic voice signals or
Article 308 of the Revised Penal Code. The current emanating from said calls. The human
rule is that, penal laws are to be construed voice and the electronic voice signals or
strictly. Penal statutes may not be enlarged by current caused thereby are intangible and not
implication or intent beyond the fair meaning of susceptible of possession, occupation or
the language used; and may not be held to appropriation by PLDT or even the petitioner,
include offenses other than those which are for that matter. PLDT merely transmits the
clearly described. electronic voice signals through its facilities
and equipment. Baynet Card Ltd., through its
One is apt to conclude that "personal property" operator, merely intercepts, reroutes the calls
standing alone, covers both tangible and and passes them to its toll center.
intangible properties and are subject of theft
under the Revised Penal Code. But the words
"Personal property" under the Revised Penal
Code must be considered in tandem with the