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 mortgage on
the machines and the building on 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 from Agricola the 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 Mortgage refers 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 cannot be 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. 1473 of the New Civil Code provides the following rules on
determining ownership of property which has been sold to different
vendees:
If Personal Property grant ownership to person who 1st
possessed it in good faith
If Real Property grant ownership to person who 1st
recorded it in the Registry
If no entry grant to person who 1st possessed in good faith
If no proof of possession grant to person who presents 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 not a purchaser in good faith.
One who purchases real estate with knowledge of a defect or lack of title in
his vendor cannot claim that he has acquired title thereto in good faith as
against the true owner of the land or of an interest therein. 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.
Good Faith, or the want of it, is a state or 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 Intention is 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 February
28, 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 extend
to 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.

-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 land
on 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 BUILDING IS ALWAYS 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 was
real property, and the mere fact that the parties seem to have dealt with it
separate and apart from the land on which it stood in no wise changed its
character as real property. It follows that neither the original registry in the
chattel mortgage 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 IMMOVABLE 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.

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 (not
merely 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 BY 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 on
record, 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 of
personal 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 on
record.

CONSTRUCTION OF ALL KINDS 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
removable and merely attached to a square metal frame by means of bolts,
which when unscrewed could easily be dismantled and moved from place to
place.
They can not be included under paragraph 3, as they are not attached to an
immovable in a fixed manner, and they can be separated without breaking
the material or causing deterioration upon the object to which they are
attached. Each of these steel towers or supports consists of steel bars or
metal strips, joined together by means of bolts, which can be disassembled
by unscrewing the bolts and reassembled by screwing the same.
These steel towers or supports do not also fall under paragraph 5, for they
are not machineries 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 BY 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
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 protest
before or at the time of the sale of this property. It must further be pointed out
that while not conclusive, the characterization of the property as chattels by
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 so
placed by a tenant, a usufructuary, or any person having only a temporary
right, unless such person acted as the agent of the owner. 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 consider
real 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 real
property 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.
Article 415[l] and [3] provides that real property may consist of constructions
of all kinds adhered to the soil and 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 of
gas 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 civil 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

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 are
not 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 those which belong to the State without being for
public use, and are intended for some public service or for the
development of the national wealth" 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 and
the 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.
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 also
satisfied 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 not
automatically 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, is
unalienable 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 valid
When 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.
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 dismantled
house 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 a
period 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 mortgage
registry, and the sale of the property to the machinery company in
satisfaction of the mortgage was annotated in the same registry on
December 29, 1913.
A few weeks thereafter, on or about the 14th of January, 1914, the
"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 real
property, and it must be apparent that the annotation or inscription of a deed
of sale of real property in a chattel mortgage registry cannot be given the
legal effect of an inscription in the registry of real property. By its express
terms, the Chattel Mortgage Law contemplates and makes provision for
mortgages of personal property; and the sole purpose and object of the
chattel mortgage registry is to provide for the registry of "Chattel mortgages,"
that is to say, mortgages of personal property executed in the manner and
form prescribed in the statute. The building of strong materials in which the
rice-cleaning machinery was installed by the "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 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.




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 with
warehouse 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 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."
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 a
corporation to be known as Plaza Theatre, Inc., that would engage in such
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, thus
leaving 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 the
corporation 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 said
case. 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 of
such 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 REAL
ESTATE 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, Pineda
questioned the validity of the chattel mortgage over his house on the ground
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" in
the 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 that
may 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 make
an inconsistent stand by claiming otherwise. Moreover, the subject house
stood on a rented lot to which defendants-appellants merely had a temporary
right as lessee, and although this can not in itself alone determine the status
of the property, it does so when combined with other factors to sustain the
interpretation that the parties, particularly the mortgagors, intended to treat
the house as 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
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 her
property. 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 fact
that 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 December
6, 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 to
cloak the building with an uncertain status made dependent on the ownership
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 merely
a 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, the
house 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, any
dominical right in and to said house, so that she could not have transmitted
to her assignee, plaintiff Piansay, any such right 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 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.


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 to
construct, maintain and operate an electric street railway and electric light,
heat and power system in the City of Manila and its suburbs to the person or
persons making the most favorable bid. Charles M. Swift was awarded the
said franchise on March 1903, the terms and conditions of which were
embodied in Ordinance No. 44 approved on March 24, 1903. Respondent
Manila Electric Co. (Meralco for short), became the transferee and owner of
the franchise.
Meralco's electric power is generated by its hydro-electric plant located at
Botocan Falls, Laguna and is transmitted to the City of Manila by means of
electric transmission wires, running from the province of Laguna to the said
City. These electric transmission wires which carry high voltage current, are
fastened to insulators attached on steel towers constructed by respondent at
intervals, from its hydro-electric plant in the province of Laguna to the City of
Manila. The respondent Meralco has constructed 40 of these steel towers
within Quezon City, on land belonging to it.
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 filed 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 the
following 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 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 removable and merely attached to a square metal frame by
means of bolts, which when unscrewed could easily be dismantled and
moved from place to place. They can not be included under paragraph 3, as
they are not attached to an immovable in a fixed manner, and they can be
separated without breaking the material or causing deterioration upon the
object to which they are attached. Each of these steel towers or supports
consists of steel bars or metal strips, joined together by means of bolts,
which can be disassembled by unscrewing the bolts and reassembled by
screwing the same. These steel towers or supports do not also fall under
paragraph 5, for they are not machineries 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.