case digest prop

8/12/2019 Case Digest Prop

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Leung Yee vs Strong Machinery Co.

37 PHIL 644

GR No. L-11658

February 15, 1918

FACTS

The Compania Agricola Filipina(CAF) purchased from Strong Machinery

Co.ricecleaning machines which CAF installed in one of its buildings.

As security for the purchase price, CAF executed a chattel mortgageon

the machinesand the buildingon which they had been installed.

When CEF failed to pay, the registered mortgage was foreclosed and Strong

Machinery Co.purchased the building. This sale was annotated in the

Chattel Mortgage Registry.

Later, Strong Machinery Co.also purchased fromAgricolathe lot on which

the building was constructed. The sale wasn't registered in the Registry of

Property BUT Strong Machinery Co.took possession of the building and the

lot.

However, the same building had been previously purchased by Leung Yee, a

creditor ofAgricola, at a sheriff's sale despite his knowledge of the prior sale

in favor of Strong Machinery Co.. The sale to Leung Yee was registered in

the Registry of Property.

ISSUES

1. Was the property's nature changed by its registration in the Chattel

Mortgage Registry?

2. Who has a better right to the property?

HELD

1. Where the interest conveyed is of the nature of real property, the placing

of the document on record in the Chattel Mortgage Registry is a futile act.

Chattel Mortgagerefers to the mortgage of Personal Property executed

in the manner and form prescribed in the statute.

Since the building is REAL PROPERTY, its sale as annotated in the Chattel

Mortgage Registry cannotbe given the legal effect of registration in the

Registry of Real Property.

The mere fact that the parties decided to deal with the building as personal

property does not change its character as real property.

Neither the original registry in the chattel mortgage registry, nor the

annotation in said registry of the sale of the mortgaged property had any

effect on the building.

1. Art. 1473of the New Civil Code provides the following rules on

determining ownership of property which has been sold to different

vendees:

If Personal Propertygrant ownership to person who 1st

possessed it in good faith

If Real Propertygrant ownership to person who 1st

recorded it in the Registry

If no entrygrant to person who 1st possessed in good faith

If no proof of possessiongrant to person whopresents oldest

title

Since Leung Yee purchased the property despite knowledge of the previous

purchase of the same by Strong Machinery Co., it follows that Leung Yee

was nota purchaser in good faith.

One who purchases real estate with knowledge of a defect or lack of title in

his vendor cannot claim that he has acquired title thereto in good faith as

against the true owner of the land or of an interest therein. The same rule

must be applied to one who has knowledge of facts which should have put

him upon such inquiry and investigation as might be necessary to acquaint

him with the defects in the title of his vendor.


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Good Faith, or the want of it, is a stateor condition of mind which can

only be judged of by actual or fancied tokens or signs.(Wilder vs.

Gilman, 55Vt., 504, 505; Cf. Cardenas Lumber Co. vs. Shadel, 52 La. Ann.,

2094-2098; Pinkerton Bros. Co. vs. Bromley, 119Mich., 8, 10, 17.)

Honesty Of Intentionis the honest lawful intent constituting good faith.

It implies afreedom from knowledge and circumstances which ought to

put a person on inquiry.

As such, proof of such knowledge overcomes the presumption of good faith.

Following the rule on possessory rights provided in Art. 1473, Strong

Machinery Co.has a better right to the property since it first purchased the

same ahead of Leung Yee, the latter not being a purchaser in good faith.

Lopez v. Orosa

LOPEZ V. OROSA AND PLAZA THEATREG.R. Nos. L-10817-18 February28, 1958

FACTS:

-Petitioner Lopez was engaged in doing business under the trade name

Lopez-Castelo Sawmill.

Orosa, a resident of the same province as Lopez, invited the latter to make

an investment in the theatre business. Lopez declined to invest but agreed to

supply the lumber necessary for the construction of the proposed theatre.They had an oral agreement that Orosa would be personally liable for any

account that the said construction might incur and that payment would be on

demand and not cash on delivery basis.

Lopez delivered the which was used for construction amounting to

P62,255.85. He was paid only P20,848.50, leaving a balance of P41,771.35.

The land on which the building was erected previously owned by Orosa, was

later on acquired by the corporation.

. As Lopez was pressing Orosa for payment, the latter and president of the

corporation promised to obtain a bank loan by mortgaging the properties of

the Plaza Theatre., out of which the unpaid balance would be satisfied. But

unknown to Lopez, the corporation already obtained a loan with Luzon

Surety Company as surety, and the corporation in turn executed a mortgage

on the land and building in favor of the said company as counter-security.

Due to the persistent demands of Lopez, Orosa executed a deed of

assignment over his shares of stock in the corporation.

As it remained unsettled, Lopez filed a case against Orosa and Plaza theatre

praying that they be sentenced to pay him jointly and severally of the unpaid

balance; and in case defendants fail to pay, the land and building owned by

the corporation be sold in public auction with the proceeds be applied to the

balance; or the shares of stock be sold in public auction.

The lower court held that defendants were jointly liable for the unpaid

balance and Lopez thus acquired the material mans lien over the

construction. The lien was merely confined to the building and did not extendto the on which the construction was made.

Lopez tried to secure a modification of the decision, but was denied.

ISSUES:

Whether the material mans lien for the value of the materials used in the

construction of the building attaches to said structure alone and doesnt

extend to the land on which the building is adhered to.

Whether the lower court and CA erred in not providing that the material mans

liens is superior to the mortgage executed in favor of surety company not

only on the building but also on the land.

HELD:

-The material mans lien could be charged only to the building for which the

credit was made or which received the benefit of refection, the lower court

was right in, holding at the interest of the mortgagee over the land is superior

and cannot be made subject to the material man's lien.


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-Generally, real estate connotes the land and the building constructed

thereon, it is obvious that the inclusion of the building in the enumeration of

what may constitute real properties could only mean one thingthat a

building is by itself an immovable property.

-In the absence of any specific provision to the contrary, a building is an

immovable property irrespective of whether or not said structure and the landon which it is adhered to belong to the same owner.

-The law gives preference to unregistered refectionary credits only with

respect to the real estate upon which the refectionary or work was made.

- The lien so created attaches merely to the immovable property for the

construction or repair of which the obligation was incurred. Therefore, the lien

in favor of appellant for the unpaid value of the lumber used in the

construction of the building attaches only to said structure and to no other

property of the obligors.

Property: Immovable and Movable Case Doctrines

I. IMMOVABLE PROPERTY

REAL PROPERTY UNDER PAR NO. 1; LANDS, BUILDINGS, ROADS AND

CONSTRUCTIONS OF ALL KINDS ADHERING TO THE SOIL

A B UILDING IS ALWA YS IMMOVABLE

Lopez v. Orosa

Building is separate and distinct from land

While it is true that generally, real estate connotes the land and the building

constructed thereon, it is obvious that the inclusion of the building, separate

and distinct from the land, in the enumeration of what may constitute real

properties could mean only one thing that a building is by itself an

immovable property (cf. Leung Yee v. Strong Machinery). In the absence of

any specific provision of law to the contrary, a building is an immovable

property, irrespective of whether or not said structure and the land on which it

is adhered to belong to the same owner.

Prudential Bank v. Panis

Building separate and distinct from the land

In the enumeration of properties under Article 415 of the Civil Code of the

Philippines, it is obvious that the inclusion of 'building' separate and distinct

from the land, in said provision of law can only mean that a building is by

itself an immovable property.

Leung Yee v. Strong Machinery

Building separate from land does not affect character as real property;

Registry of chattel mortgage does not affect character of the building

and the machineries installed therein

The Chattel Mortgage Law contemplates and makes provision for mortgages

of personal property; and the sole purpose and object of the chattel mortgage

registry is to provide for the registry of "Chattel mortgages," mortgages of

personal property executed in the manner and form prescribed in the statute.

The building of strong materials in which the machinery was installed wasreal property, and the mere fact that the parties seem to have dealt with it

separate and apart from the land on which it stood in no wise changed its

character as real property. It follows that neither the original registry in the

chattel mortgage registry of the instrument purporting to be a chattel

mortgage of the building and the machinery installed therein, nor the

annotation in that registry of the sale of the mortgaged property, had any

effect whatever so far as the building was concerned.

BUILDING IS IMMOVABL E BY INCORPORATION

Bicerra v. Teneza

House is immovable property even if situated on land belonging to a

different owner; Exception, when demolished

A house is classified as immovable property by reason of its adherence to

the soil on which it is built (Article 415, paragraph 1, Civil Code). This

classification holds true regardless of the fact that the house may be situated

on land belonging to a different owner. But once the house is demolished, as

in this case, it ceases to exist as such and hence its character as an

immovable likewise ceases.


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BUILDING ON RENTED LAND IS STILL IMMOVABLE

Evangelista v. Alto Surety

House is not personal, but immovable property

The house is not personal property, much less a debt, credit or other

personal property not capable of manual delivery, but immovable property.

As explicitly held, in Laddera vs. Hodges (48 OG 5374), "a true building (notmerely superimposed on the soil) is immovable or real property, whether it is

erected by the owner of the land or by a usufructuary or lessee. This is the

doctrine in Leung Yee vs. Strong Machinery Company, 37 Phil., 644. The

opinion that the house of Rivera should have been attached in accordance

with subsection (c) of said section 7, as "personal property capable of

manual delivery, by taking and safely keeping in his custody", for it declared

that "Evangelista could not have validly purchased Ricardo Rivera's house

from the sheriff as the latter was not in possession thereof at the time he sold

it at a public auction is untenable.

House may be considered personal property in a deed of chattel

mortgage, but view is limited to parties

Parties to a deed of chattel mortgage may agree to consider a house as

personal property for purposes of said contract (Luna vs. Encarnacion, 48

OOG 2664; Standard Oil Co. of New York vs. Jaramillo, 44 Phil., 630; De

Jesus vs. Juan Dee Co., Inc., 72 Phil., 464). However, this view is good only

insofar as the contracting parties are concerned. It is based, partly, upon the

principle of estoppel. Neither this principle, nor said view, is applicable to

strangers to said contract.

INSTANCES WHERE BUILDING IS TREATED AS PERSONAL B Y THE

PARTIES

GENERAL TEST, OF MOVABLE CHARACTER

Stadard Oil v. Jamarillo

Jaramillo, register of deeds, does not have judicial or quasi-judicial

power to determine nature of document registered as chattel mortgage

Section 198 of the Administrative Code, originally of Section 15 of the Chattel

Mortgage Law (Act 1508 as amended by Act 2496), does not confer upon the

register of deeds any authority whatever in respect to the "qualification," as

the term is used in Spanish law, of chattel mortgages. His duties in respect to

such instruments are ministerial only. The efficacy of the act of recording a

chattel mortgage consists in the fact that it operates as constructive notice of

the existence of the contract, and the legal effects of the contract must be

discovered in the instrument itself in relation with the fact of notice.

Registration adds nothing to the instrument, considered as a source of title,

and affects nobody's rights except as a species of notice. Thus, it is duty for

the register of deed to accept the proper fee and place the instrument onrecord, as his duties in respect to the registration of chattel mortgages are of

a purely ministerial character; and no provision of law can be cited which

confers upon him any judicial or quasi-judicial power to determine the nature

of any document of which registration is sought as a chattel mortgage.

It may be noted that in an administrative ruling by James Ostrand, Judge of

the fourth branch of CFI Manila (9th Judicial District) and later Supreme

Court Justice, provided the same position that the Register of Deeds has no

authority to pass upon the capacity of the parties to a chattel mortgage which

is presented to him for record. The issue where the chattel mortgage is held

ineffective against third parties as the mortgaged property is real instead ofpersonal is a question determine by the courts of justice and mot by the

register of deeds.

Issue whether interest is in nature of real property not relevant to the

issue of placing the document on record in Chattel Mortgage

In Leung Yee vs. Frank L. Strong Machinery, the Supreme Court held that

where the interest conveyed is of the nature of real property, the placing of

the document on record in the chattel mortgage register is a futile act. That

decision is not decisive of the question before the Supreme Court, which has

reference to the function of the register of deeds in placing the document onrecord.

CONSTRUCTION OF ALL K INDS ADHERED TO THE SOIL

Board of Assessment Appeals v. City Treasurer

Steel towers are not immovable property under paragraph 1, 3 and 5

The steel towers or supports do not come within the objects mentioned in

paragraph 1, because they do not constitute buildings or constructions

adhered to the soil. They are not constructions analogous to buildings nor

adhering to the soil. As per description, given by the lower court, they are


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removable and merely attached to a square metal frame by means of bolts,

which when unscrewed could easily be dismantled and moved from place to

place.

They can not be included under paragraph 3, as they are not attached to an

immovable in a fixed manner, and they can be separated without breaking

the material or causing deterioration upon the object to which they are

attached. Each of these steel towers or supports consists of steel bars or

metal strips, joined together by means of bolts, which can be disassembledby unscrewing the bolts and reassembled by screwing the same.

These steel towers or supports do not also fall under paragraph 5, for they

are not machineries or receptacles, instruments or implements, and even if

they were, they are not intended for industry or works on the land. Petitioner

is not engaged in an industry or works on the land in which the steel supports

or towers are constructed.

REAL PROPERTY UNDER NO. 2: TREES, PLANTS AND GROWING

FRUITS.

TREES AND PLANTS

Sibal v. Valdez

Paragraph 2, Article 334 of the Civil Code interpreted by the Tribunal

Supremo de Espana as that growing crops may be considered as

personal property

Sugar cane may come under the classification of real property as

"ungathered products" in paragraph 2 of article 334 of the Civil Code, which

enumerates as real property as "Trees, plants, and ungathered products,while they are annexed to the land or form an integral part of any immovable

property." That article, however, has received in recent years an

interpretation by the Tribunal Supremo de Espaa, which holds that, under

certain conditions, growing crops may be considered as personal property.

(Decision of March 18, 1904, vol. 97, Civil Jurisprudence of Spain.) Thus,

under Spanish authorities, pending fruits and ungathered products may be

sold and transferred as personal property. Also, the Supreme Court of Spain,

in a case of ejectment of a lessee of an agricultural land, held that the lessee

was entitled to gather the Products corresponding to the agricultural year

because said fruits did not go with the land but belonged separately to the

lessee. And further, under the Spanish Mortgage Law of 1909, as amended,

the mortgage of a piece of land does not include the fruits and products

existing thereon, unless the contract expressly provides otherwise.

REAL PROPERTY UNDER NO. 3: EVERYTHING ATTACHED TO AN

IMMOVABLE IN A FIXED MANNER

ATTACHMENT MUST BE IN A FIXED MANNER

Board of Assessment Appeals v. City Treasurer

Steel towers are not immovable property under paragraph 1, 3 and 5

They can not be included under paragraph 3, as they are not attached to an

immovable in a fixed manner, and they can be separated without breaking

the material or causing deterioration upon the object to which they are

attached. Each of these steel towers or supports consists of steel bars or

metal strips, joined together by means of bolts, which can be disassembled

by unscrewing the bolts and reassembled by screwing the same.

REAL PROPERTY UNDER NO. 5: MACHINERIES, RECEPTACLES,

INSTRUMENTS OR IMPLEMENTS

THEY MUST BE DESTINED FOR USE IN THE INDUSTRY OR WORK

MOVABLES MUST BE PLACED B Y THE OWNER

Ago v. CA

Sawmill machineries and equipment are real properties in accordance

with Art. 415 (5)By reason of installment in a building, the said sawmill machineries and

equipments became real estate properties in accordance with the provision

of Art. 415(5) of the Civil Code. It is interpreted similarly to the case of

Berkenkotter vs. Cu Unjieng e Hijos, where the Court held that the

installation of the machinery and equipment in the central of the Mabalacat

Sugar Company for use in connection with the industry carried by that

company, converted the said machinery and equipment into real estate by

reason of their purpose. In the present case, the installation of the sawmill

machineries in the building of the Golden Pacific Sawmill, Inc., for use in the

sawing of logs carried on in said building, the same became a necessary and

permanent part of the building or real estate on which the same was


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constructed, converting the said machineries and equipments into real estate

within the meaning of Article 415(5) of the Civil Code of the Philippines.

Davao Sawmill v. Castillo

Movables must be placed by the owner

Standard Oil ruling key to issue on the character of the property

It must be pointed out that Davao Sawmill should have registered its protestbefore or at the time of the sale of this property. It must further be pointed out

that while not conclusive, the characterization of the property as chattels by

Davao Sawmill is indicative of intention and impresses upon the property the

character determined by the parties. In this connection the decision of the

court in the case of Standard Oil vs. Jaramillo, whether obiter dicta or not,

furnishes the key to such a situation.

Immobilization of machinery; when placed in plant by owner

Machinery which is movable in its nature only becomes immobilized when

placed in a plant by the owner of the property or plant, but not when soplaced by a tenant, a usufructuary, or any person having only a temporary

right, unless such person acted as the agent of the owner. The distinction

rests upon the fact that one only having a temporary right to the possession

or enjoyment of property is not presumed by the law to have applied movable

property belonging to him so as to deprive him of it by causing it by an act of

immobilization to become the property of another.

APPLICATION OF THE PRINCIPLE OF ESTOPPEL

Sergs Products v. PCI Leasing

Machinery immovable properties by incorporation

The machinery were essential and principal elements of their chocolate-

making industry. Hence, although each of them was movable or personal

property on its own, all of them have become "immobilized by destination

because they are essential and principal elements in the industry." The

machines are thus, real, not personal, property pursuant to Article 415 (5) of

the Civil Code.

Parties estopped when parties stipulated properties as personal;

property thus subject to writ of seizure

Contracting parties may validly stipulate that a real property be considered as

personal. After agreeing to such stipulation, they are consequently estopped

from claiming otherwise. Under the principle of estoppel, a party to a contract

is ordinarily precluded from denying the truth of any material

fact found therein. Thus, said machines are proper subjects of the Writ of

Seizure

Third parties acting in good faith not affected by stipulation to considerreal property as personal

The holding that the machines should be deemed personal property pursuant

to the Lease Agreement is good only insofar as the contracting parties are

concerned. Hence, while the parties are bound by the Agreement, third

persons acting in good faith are not affected by its stipulation characterizing

the subject machinery as personal. In the present case, however, there is no

showing that any specific third party would be adversely affected.

REAL PROPERTY UNDER NO. 10

Hongkong & Shanghai Banking v. Aldecoa & Co.

Court has jurisdiction as bank does not seek to exercise mortgage right

on real properties in the provinces

The bank is not seeking to exercise its mortgage rights upon the mortgages

which the defendant firm holds upon certain real properties in the Provinces

of Albay and Ambos Camarines and to sell these properties at public auction

in these proceedings; nor does the judgment of the trial court directs that this

be done. Before that property can be sold the original mortgagors will have to

be made parties. The bank is not trying to foreclose any mortgages on realproperty executed by Aldecoa & Co.

CONCEPT OF REAL PROPERTY IN REAL PROPERTY TAXES

Meralco vs CBAA

Pipeline means a line of pipe connected to pumps, valves and control

devices for conveying liquids, gases or finely divided solids. It is a line of pipe

running upon or in the earth, carrying with it the right to the use of the soil in

which it is placed.


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Article 415[l] and [3] provides that real property may consist of constructions

of all kinds adhered to the soiland everything attached to an immovable in a

fixed manner, in such a way that it cannot be separated therefrom without

breaking the material or deterioration of the object.

The pipeline system in question is indubitably a construction adhering to the

soil. It is attached to the land in such a way that it cannot be separated

therefrom without dismantling the steel pipes which were welded to form the

pipeline.Insofar as the pipeline uses valves, pumps and control devices to maintain

the flow of oil, it is in a sense machinery within the meaning of the Real

Property Tax Code.

II. MOVABLE PROPERTY

PERSONAL PROPERTY UNDER NO. ART. 416 (1): "NOT INCLUDED IN

ART. 415."

Involuntary insolvency of Paul Strochecker v. Ramirez

Interest in business may be subject of mortgage

With regard to the nature of the property mortgaged which is one-half interest

in the business, such interest is a personal property capable of appropriation

and not included in the enumeration of real properties in articles 335 of the

Civil Code, and may be the subject of mortgage. All personal property may

be mortgaged. (Sec. 7, Act 1508.)

PERSONAL PROPERTY UNDER ART. 416 (2): "BY SPECIAL PROVISION

OF LAW."

Sibal v. Valdez

Chattel Mortgage Law recognizes growing crops as personal property

Act 1508, the Chattel Mortgage Law, fully recognizes that growing crops are

personal property. Section 2 of said Act provides that "All personal property

shall be subject to mortgage, agreeably to the provisions of this Act, and a

mortgage executed in pursuance thereof shall be termed a chattel

mortgage." Section 7 in part provides that "If growing crops be mortgaged the

mortgage may contain an agreement stipulating that the mortgagor binds

himself properly to tend. care for and protect the crop while growing." The

above provisions of Act 1508 were enacted on the assumption that "growing

crops" are personal property.

PERSONAL PROPERTY UNDER ART. 416 (3): "FORCES OF NATURE."

US v. Carlos

While electrivity is not fluid, still its manifestations and effects like those ofgas may be felt and seen. The true test of what may be stolen is not whether

it is corporeal ro incorporeal, but whether, being poessed of value, a person

other than the owner, may appropirate the same. Electrcity like gas, is a

valuable merchandise, and may thus be stolen.

PERSONAL PROPERTY UNDER ART. 416 (4): "CAN BE TRANSPORTED

FROM PLACE TO PLACE."

Philippine Refining v. Jarque

Vessels are personal property under civil and common law

Vessels are considered personal property under the c ivil law. (Code of

Commerce, article 585.) Similarly under the common law, vessels are

personal property. Under the common law, vessels are personal property

although occasionally referred to as a peculiar kind of personal property.

PERSONAL PROPERTY UNDER ART. 417 (2): "SHARES OF STOCKS."

Chua Guan v. Samahang Magsasaka

A share of stock in a gold mining corporation is personal property; bu the

gold mine itself, as well as any land of the corporation, is regarded as real

property by the law. The certificate itself evidencing the ownership of the

share, as well as the share itself, is regarded as personal property. Being

personal it can be subject of chattel mortgage.

III. PROPERTY IN RELATION TO THE PERSON TO WHOM IT BELONGS

(ARTS. 419-426)

PUBLIC DOMINION AND PRIVATE OWNERSHIP


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Republic v. CA

Classification of property as either of public dominion or of private

ownership; Public lands / public dominion

Property, which includes parcels of land found in Philippine territory, is either

of public dominion or of private ownership. Public lands, or those of public

dominion, have been described as those which, under existing legislation arenot the subject of private ownership, and are reserved for public purposes.

The New Civil Code enumerates properties of public dominion in Articles 420

and 502 thereof.Article 420 includes those intended for public use,

such as roads, canals, rivers, torrents, ports and bridges constructed

by the State, banks, shores, roadsteads, and others of similar

character; and thosewhich belong to the State without being for

public use, and are intended for some public service or for the

development of the national wealth" as property belonging to public

dominion. Article 502 adds "rivers and their natural beds; continuous or

intermittent waters of springs and brooks running in their natural beds andthe beds themselves; waters rising continuously or intermittently on lands of

public dominion; and lakes and lagoons formed by Nature on public lands

and their beds; to the enumeration.

Extent of a lake bed

The extent of a lake bed is defined in Artcile 74 of the Law of Waters of 1866,

as the natural bed or basin of lakes, ponds, or pools, is the ground covered

by their waters when at their highest ordinary depth."

Highest Ordinary Depth in a lake; Determinant is rainfall and not

gravitational pull (tides)

The phrase "highest ordinary depth" has been interpreted in the case of

Government. vs. Colegio de San Jose to be the highest depth of the waters

of Laguna de Bay during the dry season, such depth being the "regular,

common, natural, which occurs always or most of the time during the year; or

thus rain "falling directly on or flowing into Laguna de Bay from different

sources." While the waters of a lake are also subject to the same

gravitational forces that cause the formation of tides in seas and oceans, this

phenomenon is not a regular daily occurrence in the case of lakes. The

alternation of high tides and low tides, which is an ordinary occurrence, could

hardly account for the rise in the water level of the Laguna de Bay as

observed 4-5 months a year during the rainy season; rather, it is the rains

which bring about the inundation of a portion of the land in question. Since

the rise in the water level which causes the submersion of the land occurs

during a shorter period than the level of the water at which the land is

completely dry, the latter should be considered as the "highest ordinary

depth" of Laguna de Bay. The land sought to be registered, therefore, is not

part of the bed or basin of Laguna de Bay.

Foreshore land defined; Definition does not apply to land adjacent to

lake

Foreshore land is that part of (the land) which is between high and low water

and left dry by the flux and reflux of the tides; or the strip of land that lies

between the high and low water marks and that is alternately wet and dry

according to the flow of the tide. In the present case, since the inundation of

a portion of the land near the lake is not due to flux and reflux of tides, it

thus cannot be considered a foreshore land within the meaning cited by the

Director of Lands.

Purpose of land registration under Torrens System

The purpose of land registration under the Torrens System is not the

acquisition of lands but only the registration of title which applicant already

possesses over the land. Registration under the Torrens Law was never

intended as a means of acquiring ownership. Applicant in this case asserts

ownership over the parcel of land he seeks to register and traces the roots of

his title to a public instrument of sale in favor of his father from whom he

inherited said land.

Tax declaration strong evidence of ownership acquired by prescription;

also Open, continuous, public, peaceful, exclusive and adverse

possession of the land

Applicant presents tax declarations covering the land since 1918 and also tax

receipts dating back to 1948. While it is true that by themselves tax receipts

and declarations of ownership for taxation purposes are not incontrovertible

evidence of ownership, they become strong evidence of ownership acquired

by prescription when accompanied by proof of actual possession of the

property. Further, applicant by himself and through his father before him, has

been in open, continuous, public, peaceful, exclusive and adverse

possession of the disputed land for more than 30 years, counted from 19

April 1909, when the land was acquired from a third person by purchase.


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Since applicant has possessed the subject parcel in the concept of owner

with just title and in good faith, his possession need only last for ten years in

order for ordinary acquisitive prescription to set in. Applicant has more than

satisfied this legal requirement.

Judicial confirmation of imperfect title

Even if the land sought to be registered is public land, applicant would be

entitled to a judicial confirmation of his imperfect title, since he has alsosatisfied the requirements of the Public Land Act (CA 141 as amended by RA

1942). Section 48 of the Act enumerates as among the persons entitled to

judicial confirmation of imperfect title, such as those who, by themselves or

through their predecessors-in-interest, have been in the open, continuous,

exclusive, and notorious possession and occupation of agricultural lands of

the public domain, under bona fide claim of ownership, for at least thirty

years immediately preceding the filing of the application for confirmation of

title."

Reclamation requires proper permission; reclaimed land does notautomatically belong to party reclaiming the same

Private persons cannot, by themselves reclaim land from water bodies

belonging to the public domain without proper permission from government

authorities. And even if such reclamation had been authorized, the reclaimed

land does not automatically belong to the party reclaiming the same as they

may still be subject to the terms of the authority earlier granted. In the

present case, private oppositors-petitioners failed to show proper authority

for the alleged reclamation, therefore, their claimed title to the litigated parcel

must fall.

Tolerance of possession cannot ripen into ownership

As the private oppositors-petitioners entered into possession of the land with

the permission of, and as tenants of, the applicant del Rio; the fact that some

of them at one time or another did not pay rent. Their use of the land and

their non-payment of rents thereon were merely tolerated by applicant and

these could not have affected the character of the latter's possession which

has already ripened into ownership at the time of the filing of this application

for registration. Only possession acquired and enjoyed in the concept of

owner can serve as the root of a title acquired by prescription.

CHARACTERISTICS OF PROPERTIES OF PUBLIC DOMINION.

Vda. De Tantoco v. Muncipal Council of Iloilo

Property of public domain applies to municipal property for public use;

both not within the commerce of man

The principle governing property of the public domain of the State is

applicable to property for public use of the municipalities as said municipal

property is similar in character. The principle is that the property for public

use of the State is not within the commerce of man and, consequently, isunalienable and not subject to prescription. Likewise, property for public use

of the municipality is not within the commerce of man so long as it is used by

the public and, consequently, said property is also inalienable.

CONVERSION OF PROPERTY OF PUBLIC DOMINION TO PATRIMONIAL

PROPERTY.

Cebu Oxygen & Acetylene v. Bercilles

Street withdrawn from public use becomes patrimonial property;

Subsequent sale validWhen a portion of the city street was withdrawn from public use, such

withdrawn portion becomes patrimonial property which can be the object of

an ordinary contract. As expressly provided by Article 422 of the Civil Code,

"property of public dominion, when no longer intended for public use or for

public service, shall form part of the patrimonial property of the State."

Further, the Revised Charter of the City of Cebu, in very clear and

unequivocal terms, states that "property thus withdrawn from public servitude

may be used or conveyed for any purpose for which other real property

belonging to the City may be lawfully used or conveyed." Thus, the

withdrawal of the property in question from public use and its subsequent

sale to the petitioner is valid.

1

Bicerra vs. Teneza

6 SCRA 649

Facts: This case is before us on appeal from the order of the Court of First

Instance of Abra dismissing the complaint filed by appellants, upon motion of

defendants-appellees on the ground that the action was within the exclusive

(original) jurisdiction of the Justice of the Peace Court of Lagangilang, of the

same province.


10/16

The complaint alleges in substance that appellants were the owners of the

house, worth P200.00, built on a lot owned by them and situated in the said

municipality of Lagangilang; that sometime in January 1957 appellees

forcibly demolished the house, claiming to be the owners thereof; that the

materials of the house, after it was dismantled, were placed in the custody of

the barrio lieutenant of the place; and that as a result of appellees' refusal to

restore the house or to deliver the materials to appellants the latter have

suffered actual damages in the amount of P200.00 plus moral and

consequential damages in the amount of P600.00.

Issue: Whether or not the action involves title to real property?

Ruling: No. A house is classified as immovable property by reason of its

adherence to the soil on which it is built (Art. 415, par. 1, Civil Code). This

classification holds true regardless of the fact that the house may be situated

on land belonging to a different owner. But once the house is demolished, as

in this case, it ceases to exist as such and hence its character as an

immovable likewise ceases. It should be noted that the complaint here is for

recovery of damages. This is the only positive relief prayed for by appellants.

To be sure, they also ask that they be declared owners of the dismantledhouse and/or of the materials. However, such declaration in no wise

constitutes the relief itself which if granted by final judgment could be

enforceable by execution. but is only incidental to the real cause of action to

recover damages.

2

Punsalan, Jr. vs. Vda. De Lacsamana

121 SCRA 331

Facts: Antonio Punsalan, Jr., was the former registered owner of a parcel of

land consisting of 340 square meters situated in Bamban, Tarlac. In 1963,petitioner mortgaged said land to respondent PNB (Tarlac Branch) in the

amount of P10,000.00, but for failure to pay said amount, the property was

foreclosed on December 16, 1970. Respondent PNB (Tarlac Branch) was

the highest bidder in said foreclosure proceedings. However, the bank

secured title thereto only on December 14, 1977.

In the meantime, in 1974, while the property was still in the alleged

possession of petitioner and with the alleged acquiescence of respondent

PNB (Tarlac Branch), and upon securing a permit from the Municipal Mayor,

petitioner constructed a warehouse on said property. Petitioner declared said

warehouse for tax Purposes for which he was issued Tax Declaration No.

5619. Petitioner then leased the warehouse to one Hermogenes Sibal for aperiod of 10 years starting January 1975.

On July 26, 1978, a Deed of Sale was executed between respondent PNB

(Tarlac Branch) and respondent Lacsamana over the property.

On November 22, 1979, petitioner commenced suit for "Annulment of Deed

of Sale with Damages" against herein respondents PNB and Lacsamana

before respondent Court of First Instance of Rizal, Branch XXXI, Quezon

City, essentially impugning the validity of the sale of the building as

embodied in the Amended Deed of Sale. But the Court dismissed the action

on the ground of improper venue because the action is for the recovery of a

real property. The Court ruled that the venue should be on Tarlac.

Issue: Whether or not dismissal is meritorious on the ground of improper

venue?

Ruling: Yes. The warehouse claimed to be owned by petitioner is an

immovable or real property as provided in article 415(1) of the Civil Code.

Buildings are always immovable under the Code. A building treated

separately from the land on which it stood is immovable property and the

mere fact that the parties to a contract seem to have dealt with it separate

and apart from the land on which it stood in no wise changed its character as

immovable property.While it is true that petitioner does not directly seek the recovery of title or

possession of the property in question, his action for annulment of sale and

his claim for damages are closely intertwined with the issue of ownership of

the building which, under the law, is considered immovable property, the

recovery of which is petitioner's primary objective. The prevalent doctrine is

that an action for the annulment or rescission of a sale of real property does

not operate to efface the fundamental and prime objective and nature of the

case, which is to recover said real property. It is a real action.

3

Leung Yee vs. Strong Machinery Co.37 PHIL 644

Facts: The "Compana Agricola Filipina" bought a considerable quantity of

rice-cleaning machinery from the defendant machinery company, and

executed a chattel mortgage thereon to secure payment of the purchase

price. It included in the mortgage deed the building of strong materials in

which the machinery was installed, without any reference to the land on

which it stood. The indebtedness secured by this instrument not having been

paid when it fell due, the mortgaged property was sold by the sheriff, in

pursuance of the terms of the mortgage instrument, and was bought in by the

machinery company. The mortgage was registered in the chattel mortgageregistry, and the sale of the property to the machinery company in


11/16

satisfaction of the mortgage was annotated in the same registry on

December 29, 1913.

A few weeks thereafter, on or about the 14th of January, 1914, the

"Compania Agricola Filipina" executed a deed of sale of the land upon which

the building stood to the machinery company, but this deed of sale, although

executed in a public document, was not registered. The machinery company

went into possession of the building at or about the time when this sale took

place, that is to say, the month of December, 1913, and it has continued in

possession ever since.At the time when the execution was levied upon the building, the defendant

machinery company, which was in possession, filed with the sheriff a sworn

statement setting up its claim of title and demanding the release of the

property from the levy. Thereafter, upon demand of the sheriff, the plaintiff

executed an indemnity bond in favor of the sheriff in the sum of P12,000, in

reliance upon which the sheriff sold the property at public auction to the

plaintiff, who was the highest bidder at the sheriff's sale.

Issue: Whether or not the machineries should be considered as chattels?

Ruling: No. The registry here referred to is of course the registry of realproperty, and it must be apparent that the annotation or inscription of a deed

of sale of real property in a chattel mortgage registry cannot be given the

legal effect of an inscription in the registry of real property. By its express

terms, the Chattel Mortgage Law contemplates and makes provision for

mortgages of personal property; and the sole purpose and object of the

chattel mortgage registry is to provide for the registry of "Chattel mortgages,"

that is to say, mortgages of personal property executed in the manner and

form prescribed in the statute. The building of strong materials in which the

rice-cleaning machinery was installed by the "Compania Agricola Filipina"

was real property, and the mere fact that the parties seem to have dealt with

it separate and apart from the land on which it stood in no wise changed its

character as real property. It follows that neither the original registry in thechattel mortgage registry of the instrument purporting to be a chattel

mortgage of the building and the machinery installed therein, nor the

annotation in that registry of the sale of the mortgaged property, had any

effect whatever so far as the building was concerned.

4

Prudential Bank vs. Panis

153 SCRA 390

Facts: This is a petition for review on certiorari of the November 13,1978

Decision** of the then Court of First Instance of Zambales and Olongapo City

declaring that the deeds of real est-ate mortgage executed by respondent

spouses in favor of petitioner bank are null and void.

On November 19, 1971, plaintiffs-spouses Fernando A. Magcale and

Teodula Baluyut Magcale secured a loan in the sum of P70,000.00 from the

defendant Prudential Bank. To secure payment of this loan, plaintiffs

executed in favor of defendant on the aforesaid date a deed of Real Estate

Mortgage over a 2-STOREY, SEMI-CONCRETE, residential building withwarehouse spaces containing a total floor area of 263 sq. meters, more or

less, generally constructed of mixed hard wood and concrete materials which

is eclared and assessed in the name of FERNANDO MACCALE.

All corners of the lot marked by conc. cylindrical monuments of the Bureau of

Lands as visible limits.

Issue: Whether or not a valid real estate mortgage can be constituted on the

building erected on the land belonging to another?

Ruling: Yes. In the enumeration of properties under Article 415 of the Civil

Code of the Philippines, this Court ruled that, "it is obvious that the inclusionof 'building' separate and distinct from the land, in said provision of law can

only mean that a building is by itself an immovable property."

Thus, while it is true that a mortgage of land necessarily includes, in the

absence of stipulation of the improvements thereon, buildings, still a building

by itself may be mortgaged apart from the land on which it has been built.

Such a mortgage would be still a real estate mortgage for the building would

still be considered immovable property even if dealt with separately and apart

from the land (Leung Yee vs. Strong Machinery Co., 37 Phil. 644). In the

same manner, this Court has also established that possessory rights over

said properties before title is vested on the grantee, may be validly trans.

ferred or conveyed as in a deed of mortgage.

5

Lopez vs. Orosa, Jr. and Plaza Theater Inc.

103 PHIL 98

Facts: Enrique Lopez is a resident of Balayan, Batangas, doing business

under the trade name of Lopez-Castelo Sawmill. Sometime in May, 1946,

Vicente Orosa, Jr., also a resident of the same province, dropped at Lopez'

house and invited him to make an investment in the theatre business. It was

intimated that Orosa, his family and close friends were organizing acorporation to be known as Plaza Theatre, Inc., that would engage in such


12/16

venture. Although Lopez expressed his unwillingness to invest on the same,

he agreed to supply the lumber necessary for the construction of the

proposed theatre, and at Orosa's behest and assurance that the latter would

be personally liable for any account that the said construction might incur,

Lopez further agreed that payment therefor would be on demand and not

cash on delivery basis. Pursuant to said verbal agreement, Lpez delivered

the lumber which was used for the construction of the Plaza Theatre on May

17, 1946, up to December 4 of the same year. But of the total cost of the

materials amounting to P62,255.85, Lpez was paid only P20,848.50, thusleaving a balance of P41,771.35.

We may state at this Juncture that the Plaza Theatre was erected on a piece

of land with an area of 679.17 square meters formerly owned by Vicente

Orosa, Jr., and was acquired by the corporation on September 25, 1946, for

P6,000. As Lpez was pressing Orosa for payment of the remaining unpaid

obligation, the latter and Belarmino Rustia, the president of the corporation,

promised to obtain a bank loan by mortgaging the properties of the Plaza

Theatre, Inc., out of which said amount of P41,771.35 would be satisfied, to

which assurance Lpez had to accede. Unknown to him, however, as early

as November, 1946, the corporation already got a loan for P30,000 from the

Philippine National Bank with the Luzon Surety Company as surety, and thecorporation in turn executed a mortgage on the land and building in favor of

said company as counter-security.

Issue: Whether or not owner of the building and the land on which it is

adhered must be the same?

Ruling: A building is an immovable property irrespective of whether or not

said structure and the land on which it is adhered to belong to the same

owner.

6

Evangelista vs. Alto Surety & Insurance Co.

103 PHIL 401

Facts: On June 4, 1949, petitioner herein, Santos Evangelista, instituted Civil

Case No. 8235 of the Court of First Instance of Manila against Rivera for a

sum of money. On the same date, he obtained a writ of attachment, which

was levied upon a house, built by Rivera on a land situated in Manila and

leased to him, but owned by Alto Surety. In due course, judgment was

rendered in favor of Evangelista, who, on October 8, 1951, bought the house

at public auction held in compliance with the writ of execution issued in saidcase. The corresponding definite deed of sale was issued to him on October

22, 1952, upon expiration of the period of redemption. When Evangelista

sought to take possession of the house, Rivera refused to surrender it, upon

the ground that he had leased the property from the Alto Surety & Insurance

Co., Inc.-respondent herein and that the latter is now the true owner of said

property. It appears that on May 10, 1952, a definite deed of sale of the same

house had been issued to respondent, as the highest bidder at an auction

sale held, on September 29, 1950.

Hence, on June 13, 1953, Evangelista instituted the present action against

respondent and Ricardo Rivera, for the purpose of establishing his(Evangelista) title over said house, and securing possession thereof, apart

from recovering damages.

Issue: Whether or not the house should be considered as real property for

purposes of attachment?

Ruling: Yes. A house is not personal property, much less a debt, credit or

other personal property capable of manual delivery, but immovable property.

"A true building (not merely superimposed on the soil),is immovable or real

property, whether it is elected by the owner of the land or by a usufructuary

or lessee" (Laddera vs. Hodges, 48 Off. Gaz., 5374.) and the attachment ofsuch building is subject to the provisions of subsection (a) of section 7, Rule

59 of the Rules of Court.

7

Navarro vs. Pineda

9 SCRA 631

Facts: On December 14, 1959, defendants Rufino G. Pineda and his mother

Juana Gonzales, borrowed from plaintiff Conrado P. Navarro, the sum of

P2,550.00, payable 6 months after said date or on June 14, 1959. To secure

the indebtedness, Rufino executed a document captioned "DEED OF REALESTATE and CHATTEL mortgages", whereby Juana Gonzales, by way of of

Real Estate Mortgage hypothecated a parcel of land, belonging to her,

registered with the Register of Deeds of Tarlac, Under Transfer Certificate of

Title No. 25776, and Rufino G. Pineda, by way of Chattel Mortgage,

mortgaged his two-story residential house, having a floor area of 912 square

meters, erected on a lot belonging to Atty. v. Vicente Castro, located at To.

San Boque. Tarlac, Tarlac; and one motor truck, registered in his name,

under Motor Vehicle Registration Certificate No A-171806. Both mortgages

were contained in one instrument, which was registered in both the Office of

Vie Register of Deeds and the Motor Venicles Office of Tarlac.

When Navarro filed a complaint for foreclosure of the Mortgage, Pinedaquestioned the validity of the chattel mortgage over his house on the ground


13/16

that the house, being an immovable property, could not be subject of a

chattel mortgage.

Issue: Whether or not the Chattel mortgage is valid?

Ruling: Yes. The trial court did not predicate its decision declaring the deed

of chattel mortgage valid solely on the ground that the house mortgaged was

erected on the land which belonged to a third person, but also and principally

on the doctrine of estoppel, in that "the parties have so expressly agreed" inthe mortgage to consider the house as a chattel "for its smallness and mixed

materials of sawali and wood". For purposes of the application of the Chattel

Mortgage Law, it was held that under certain conditions, "a property may

have a character different from that imputed to it in said articles. It is

undeniable that the parties to a contract may by agreement; treat as personal

property that which by nature would be real property" (Standard Oil Co. of

N.Y. vs. Jaranillo, 44 Phil., 632-633). he view that parties to a deed of chattel

mortgage may agree to consider a house as personal property for the

purposes of said contract, "is good only insofar as the contracting parties are

concerned. It is based, partly, upon the principles of estoppel . . ."

(Evangelista vs. Alto Surety No. L-11139, Apr. 23, 1958). In a case, a

mortgaged house built on a rented land, was held to be a personal property

not only because the deed of mortgage considered. it as such, but also

because it did not form an integral part of the land (Evangelista vs. Abad,

[CA]; 36 O.G. 2913), for it is now well settled that an object placed on land by

one who has only a temporary right to the same, such as a lessee or

usufructuary, does not become immobilized by attachment (Valdez vs.

Central Altagracia, 222 U.S. 58, cited in Davao Sawmill Co. Inc. vs. Castillo,

et al., 61 Phil. 709). Hence, if a house belonging to a person stands on a

rented land belonging to another person, it may be mortgaged as a personal

property if so stipulated in the document of mortgage (Evangelista vs. Abad,

supra). It should be noted, however, that the principle is predicated on

statements by the owner declaring his house to be a chattel, a conduct thatmay conceivably estop him from subsequent claiming otherwise (Ladera, et

al. vs. C.W. Hodges, et al., [CA]; 48 O.G. 5374). The doctrine, therefore,

gathered from these cases is that although in some instances, a house of

mixed materials has been considered as a chattel between the parties and

that the validity of the contract between them, has been recognized, it has

been a constant criterion nevertheless that, with respect to third persons,

who are not parties to the contract, and specially in execution proceedings,

the house is considered as an immovable property (Art. 1431, New Civil

Code).

8

Tumalad vs. Vicencio

41 SCRA 143

Facts: Vicencio and Simeon executed a chattel mortgage in favor of Tumalad

over their house on a lot rented from Madrigal and Company, Inc. When

Vicencio and Simeon defaulted in their payment of their obligation, the

mortgage was extra-judicially foreclosed and the house was sold to an

auction. Tumalad emerged as the highest bidder during the auction.Subsequently, Tuamalad filed an action for ejectment against Vicencio and

Simeon.

In their answer, the defendants Impugned the legality of the chattel mortgage

and its subsequent foreclosure on the ground that the house being an

immovable could only be a subject of a real estate mortgage and not a

chattel mortgage.

Issue: Whether or not the chattel mortgage is valid?

Ruling: Yes. In the case of Manarang and Manarang vs. Ofilada (99 Phil.

169), this Court stated that "it is undeniab1e that the parties toa contract may

by agreement treat as personal property that which by nature would be real

property," citing Standard Oil Company of New York vs. Jaramillo (44 Phil.

632).

In the contract now before Us, the house on rented land is not only expressly

designated as Chattel Mortgage; it specifically provides that "the mortgagor

... voluntarily CEDES, SELLS and TRANSFERS by way of Chattel Mortgage

the property together with its leasehold rights over the lot on which it is

constructed and participation . .." Although there is no specific statement

referring to the subject house as personal property, yet by ceding, selling or

transferring a property by way of chattel mortgage defendants-appellants

could only have meant to convey the house as chattel, or at least, intended

to treat the same as such, so that they should not now be allowed to makean inconsistent stand by claiming otherwise. Moreover, the subject house

stood on a rented lot to which defendants-appellants merely had a temporary

right as lessee, and although this can not in itself alone determine the status

of the property, it does so when combined with other factors to sustain the

interpretation that the parties, particularly the mortgagors, intended to treat

the house as personalty. It is the defendants-appellants themselves, as

debtors-mortgagors, who are attacking the validity of the chattel mortgage in

this case. The doctrine of estoppel therefore applies to the herein

defendants-appellants, having treated the subject house as personalty.

9


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Manarang vs. Ofilada

99 PHIL 108

Facts: On September 8, 1951, petitioner Lucia D. Manarang obtained a loan

of P200 from Ernesto Esteban, and to secure its payment she executed a

chattel mortgage over a house of mixed materials erected on a lot on

Alvarado Street, Manila. As Manarang did not pay the loan as agreed upon,

Esteban brought an action against her in,the municipal court of Manila for its

recovery, alleging that the loan was secured by a chattel mortgage on herproperty. Judgment having been entered in plaintiff's favor, execution was

issued against the same property mortgaged.

Before the property could be sold Manarang offered to pay the sum of P277,

which represented the amount of the judgment of P250, the interest thereon,

the costs, and the sheriff's fees, but the sheriff refused the tender unless the

additional amount of P260 representing the publication of the notice of sale in

two newspapers be paid also. So defendants therein brought this suitu to

compel the sheriff to accept the amount of P277 as full payment of the

judgment and to annul the published notice of sale.

On the basis of the above facts counsel for Alanarang contended in the court

below that the house in question should be considered as personal property

and the publication of the notice of its sale at public auction in execution

considered unnecessary. The Court of First Instance held that although real

property may sometimes be considered as personal property, the sheriff was

in duty bound to cause the publication of the notice of its sale in order to,

make the sale valid or to prevent its being declared void or voidable, and he

did not, therefore, err in causing such publication of the notice. So it denied

the petition.

Issue: Whether or not the house remains a real property?

Ruling: Yes. HOUSE IS PERSONAL PROPERTY FOR PURPOSES OF

CHATTEL MORTGAGE ONLY; REMAINS REAL PROPERTY. The mere factthat a house was the subject of a chattel mortgage and was considered as

personal property by the parties does not make said house personal property

for purposes of the notice to be given for its sale at public auction. It is real

property within the purview of Rule 39, section 16,of the Rules of Court as it

has become a permanent fixture on the land, which is real property.

10

Associated Insurance & Surety Co. vs. Iya, et.al

103 PHIL 972

Facts: Adriano Valino and Lucia A. Valino, husband and wife, were the

owners and possessors of a house of strong materials constructed on Lot

No. 3, Block No. 80 of the Grace Park Subdivision in Caloocan, Rizal, which

they purchased on installment basis from the Philippine Realty Corporation.

On November 6, 1951, to enable her to purchase on credit price from the

NARIC, Lucia A, Valino filed a bond in the sum of P11,000.00 subscribed by

the Associated Insurance & Surety Co., Inc., and ,as counter-guaranty

therefor, the spouses Valino executed an alleged chattel mortgage on the

aforementioned house in favor of the surety company, which encumbrance

was duly registered with the Chattel Mortgage Register of Rizal on December6, 1951. It is admitted that at the time said undertaking took place, the parcel

of land on which the house is erected was still registered in the name of the

Philippine Realty Corporation.

On the other hand, as Lucia A. Valino, failed to satisfy her obligation to the

NARIC, the surety company was compelled to pay the same pursuant to the

undertaking of the bond.

Sometime in July, 1953, the surety company learned of the existence of the

real estate mortgage over the lot covered by T.C.T. No. 26884 together with

the improvements thereon; thus, said surety company instituted Civil Case

No. 2162 of the Court of First Instance of Manila naming Adriano and Lucia

Valino and Isabel Iya, the mortgagee, as defendants. The complaint prayed

for the exclusion of the residential house from the real estate mortgage in

favor of defendant Iya and the declaration and recognition of plaintiff's right to

ownership over the same in virtue of the award given by the Provincial Sheriff

of Rizal during the public auction held on December 26, 1952.

The two cases were jointly heard upon agreement of the parties, who

submitted the same on a stipulation of facts, after which the Court rendered

judgment dated March 8, 1956, holding that the chattel mortgage in favor of

the Associated Insurance & Surety Co., Inc., was preferred and superior over

the real estate mortgage subsequently executed in favor of Isabel Iya.

Issue: Whether or not the immovable status of a building will be affected by

change of ownership?

Ruling: No. A building is an immovable property irrespective of whether or

not said structure and the land on which it is adhered to belong to the same

owner (Lopez vs. Orosa, supra, p. 98). It cannot be divested of its character

of a realty by the fact that the land on which it is constructed belongs to

another. If the status of the building were to depend on the ownership of the

land, a situation would be created where a permanent fixture changes its

nature or character as the ownership of the land changes hands.

A building certainly cannot be divested of its character of a realty by the fact

that the land on which it is constructed belongs to another. To hold it the

other way, the possibility is not remote that it would result in confusion, for tocloak the building with an uncertain status made dependent on the ownership


15/16

of the land, would create a situation where a permanent fixture changes its

nature or character as the ownership of the land changes hands. In the case

at bar, as personal properties could only be the subject of a chattel mortgage

(Section 1, Act 3952) and as obviously the structure in question is not one,

the execution of the chattel mortgage covering said building is clearly invalid

and a nullity. While it is true that said document was correspondingly

registered in the Chattel Mortgage Register of Rizal, this act produced no

effect whatsoever for where the interest conveyed is in the nature of a real

property, the registration of the document in the registry of chattels is merelya futile act. Thus, the registration of the chattel mortgage of a building of

strong materials produce no effect as far as the building is concerned (Leung

Yee vs. Strong Machinery Co., 37 Phil., 644).

11

Piansay vs. David

Facts: On December 11, 1943, Conrado S. David received a loan of P3,000

with interest at 12% per annum from Claudia B. Vda. de Uy Kim, one of the

plaintiffs, and to secure the payment of the same, Conrado S. David

executed a chattel mortgage on a house situated at 1259 Sande Street,

Tondo, Manila. That on February 10, 1953, the mortgaged house was sold at

'public auction to satisfy the indebtedness to Claudia B. Vda. de Uy Kim, and

the house was sold to Claudia B. Vda. de Uy Kim in the said foreclosure

proceedings; that on March 22, 1954.

Claudia B. Vda. de Uy Kim sold the same house to her co-plaintiff, Salvador

Piansay for the sum of P5,000.00; that on November 22, 1949, defendant

Conrado S. David mortgaged the said house to Marcos Mangubat, and on

March 1, 1956.

Marcos Mangubat filed a complaint against Conrado S. David or the

collection of the loan of P2,000. After obtaining a judgment against David, thehouse was levied at the instance of Mangubat.

Issue: Whether or not the right of Mangubat can be assailed?

Ruling: No. At any rate, regardless of the validity of a contract constituting a

chattel mortgage on a house, as between the parties to said contract, he

same cannot and does not bind third persons, who are not parties to the

aforementioned contract or their privies. As a consequence, the sale of the

house in question in the proceedings for the extra-judicial foreclosure of said

chattel mortgage, is null and void insofar as defendant Mangubat is

concerned, and did not confer upon Mrs. Uy Kim, as buyer in said sale, anydominical right in and to said house, so that she could not have transmitted

to her assignee, plaintiff Piansay, any such r ight as against defendant

Mangubat. In short, plaintiffs have no cause of action against the defendants

herein.

12

Standard Oil Co. of New York vs. Jaramillo

44 PHIL 630

Facts: Gervasia De La Rosa, a lesse of a parcel of land situated in the City of

Manila and owner of the house thereon, executed a deed of chattel

mortgage, conveying to the plaintiff by way of mortgage both the leasehold

interest in said lot and the building which stands thereon. After said

document had been duly acknowledge and delivered, the petitioner caused

the same to be presented to the respondent, Joaquin Jaramillo, as register of

deeds of the City of Manila, for the purpose of having the same recorded in

the book of record of chattel mortgages. Upon examination of the instrument,

the respondent was of the opinion that it was not a chattel mortgage, for the

reason that the interest therein mortgaged did not appear to be personal

property, within the meaning of the Chattel Mortgage Law, and registration

was refused on this ground only.

Issue: Whether or not the Register of Deeds can refuse registration?

Ruling: No. We are of the opinion that the position taken by the respondent is

untenable; and it is his duty to accept the proper fee and place the instrument

on record. The duties of a register of deeds in respect to the registration of

chattel mortgage are of a purely ministerial character; and no provision of lawcan be cited which confers upon him any judicial or quasi-judicial power to

determine the nature of any document of which registration is sought as a

chattel mortgage.

13

Board of Assessment Appeals vs. Manila Electric Co.

10 SCRA 68

Facts: On October 20, 1902, the Philippine Commission enacted Act No. 484

which authorized the Municipal Board of Manila to grant a franchise toconstruct, maintain and operate an electric street railway and electric light,


16/16

heat and power system in the City of Manila and its suburbs to the person or

persons making the most favorable bid. Charles M. Swift was awarded the

said franchise on March 1903, the terms and conditions of which were

embodied in Ordinance No. 44 approved on March 24, 1903. Respondent

Manila Electric Co. (Meralco for short), became the transferee and owner of

the franchise.

Meralco's electric power is generated by its hydro-electric plant located at

Botocan Falls, Laguna and is transmitted to the City of Manila by means of

electric transmission wires, running from the province of Laguna to the saidCity. These electric transmission wires which carry high voltage current, are

fastened to insulators attached on steel towers constructed by respondent at

intervals, from its hydro-electric plant in the province of Laguna to the City of

Manila. The respondent Meralco has constructed 40 of these steel towers

within Quezon City, on land belonging to it.

On November 15, 1955, petitioner City Assessor of Quezon City declared the

aforesaid steel towers for real property tax under Tax Declaration Nos. 31992

and 15549. After denying respondent's petition to cancel these declarations,

an appeal was taken by respondent to the Board of Assessment Appeals of

Quezon City, which required respondent to pay the amount of P11,651.86 as

real property tax on the said steel towers for the years 1952 to 1956.

Respondent paid the amount tinder protest, and f iled a petition for review in

the Court of Tax Appeals which rendered a decision on December 29, 1958,

ordering the cancellation of the said tax declarations and the petitioner City

Treasurer of Quezon City to refund to the respondent the sum of P11,651.86.

Issue: Whether or not the "poles" shall be considered as immovables?

Ruling: No. Granting for the purpose of argument that the steel supports or

towers in question are not embraced within the term poles, the logical

question posited is whether they constitute real properties, so that they can

be subject to a real property tax. The tax law does not provide for a definition

of real property; but Article 415 of the Civil Code does, by stating thefollowing are immovable property:

"(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;

(3) Everything attached to an immovable in a fixed manner, in such a way

that it cannot be separated therefrom without breaking the material or

deterioration of the object;

(3) Machinery, receptacles, instruments or implements intended by the owner

of the tenement for an industry or works which may be carried in a building or

on a piece of land, and which tends directly to meet the needs of the said

industry or works;"

The steel towers or supports in question, do not come within the objects

mentioned in paragraph 1, because they do not Constitute buildings orconstructions adhered to the soil. They are not constructions analogous to

buildings nor adhering to the soil. As per description, given by the lower

court, they are removable and merely attached to a square metal frame by

means of bolts, which when unscrewed could easily be dismantled and

moved from place to place. They can not be included under paragraph 3, as

they are not attached to an immovable in a fixed manner, and they can be

separated without breaking the material or causing deterioration upon the

object to which they are attached. Each of these steel towers or supports

consists of steel bars or metal strips, joined together by means of bolts,

which can be disassembled by unscrewing the bolts and reassembled byscrewing the same. These steel towers or supports do not also fall under

paragraph 5, for they are not machineries or receptacles, instruments or

implements, and even if they were, they are not intended for industry or

works on the land. Petitioner is not engaged in an industry or works on the

land in which the steel supports or towers are constructed.

case digest prop

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