IMMOVABLE PROPERTY

Paragraph 1

1. Ladera v. Hodges, O.G. No. 8027-R, 23 September 1952

2. Punzalan, Jr. v. Vda. De Lacsamana, (G.R. No. L-55729, 28 March 1983
3. Midway Maritime And Technological Foundation v. Marissa E. Castro,
Et Al., (G.R. No. 189061, 6 August 2014
4. Prudential Bank v. Honorable Domingo D. Panis, et al., (G.R. No. L-
50008, 31 August 1987
5. The Standard Oil Company Of New York v. Joaquin Jaramillo, (G.R.
No. L-20329, 16 March 1923
6. Board of Assessment Appeals v. Manila Electric Co., (G.R. No. L-15334,
31 January 1964

Paragraph 2
7. Inter-Regional Development Corporation v. Court Of Appeals And
Ricardo Caballero, (G.R. No. L-39677 22 July 1975
8. Leon Sibal v. Emiliano J. Valdez, (G.R. No. L-26278, 4 August 1927

Paragraph 3
9. Ruby L. Tsai v. Hon. Court Of Appeals, Ever Textile Mills, Inc. And
Mamerto R Villaluz, (G.R. No. 120098, 2 October 2001

Paragraph 5
10. Davao Saw Mill Co., Inc. v. Aproniano G. Castillo And Davao Light
& Power Co., Inc., (G.R. No. L-40411, 7 August 1935
11. Burgos v. Chief of Staff, (G.R. No. L-64261, 26 December 1984
12. B.H. Berkenkotter v. Cu Unjieng E Hijos, et al., (G.R. No. L-41643, 31
July 1935
13. GSIS v. Calsons, Inc., Cesario P. Calanoc, And Nenita Godinez, (G.R.
No. L-19867, 29 May 1968
14. Mindanao Bus Company v. The City Assessor & Treasurer, (G.R. No.
L-17870, 29 September 1962
15. Serg’s Products, Inc., And Sergio T. Goquiolay, Petitioners, v. Pci
Leasing And Finance, Inc., (G.R. No. 137705, 22 August 2000
16. Makati Leasing And Finance Corporation v. Wearever Textile Mills,
Inc., (G.R. No. L-58469, 16 May 1983

Paragraph 9
17. Fels Energy, Inc. v. The Province Of Batangas, (G.R. No. 168557, 16
February 2007

Paragraph 10
18. Metropolitan Bank and Trust Corporation v. Alejo, (G.R. No. 141970,
10 September 2001
19. Manila Electric Company v. The City Assessor And City Treasurer Of
Lucena City, (G.R. No. 166102, 05 August 2015

MOVABLE PROPERTY
416-418
20. Involuntary Insolvency Of Paul Strochecker v. Ildefonso Ramirez,
(G.R. No. 18520, 26 September 1922
21. PLDT v. Alvarez, (G.R. No. 179408, 5 March 2014
 IMMOVABLE PROPERTY
Paragraph 1

LADERA VS. HODGES

(O.G. No. 8027-R: 23 September 1952)

FACTS:

Ladera entered into a contract with Hodges whereby the latter

promised to sell a lot subject to certain terms and conditions. In case of
failure of the purchaser to make a monthly payment within 60 days after it
fell due, “this contract may be taken and considered as rescinded and
annulled,” in which case all sums of money paid would be considered
rentals and the vendor shall be at liberty to dispose of the parcel of land
with all the improvements thereon to any other person in a manner as if
this contract had never been made. After the execution of the contract,
Ladera built on a lot a house of mixed materials assessed at P4500.

Unfortunately, Ladera failed to pay the agreed installments,

whereupon the appellant rescinded the contract and filed an action for
ejectment. The MTC rendered a decision upon agreement of the parties-
Ladera to vacate and surrender possession of the lot and pay P10 a month
until delivery of the premises. The court issued an alias writ of execution
and pursuant thereto the sheriff levied upon all rights, interests, and
participation over your house standing on the lot. The sheriff posted the
notices of the sale but did not publish the same in a newspaper of general
circulation.

At the auction sale Ladera did not attend because she had gone to
Manila and the sheriff sold the property to Avelina Magno as the highest
bidder. On July 6, 1948, Hodges sold the lot to Manuel Villa and on the
same day the latter purchased the house from Magno for P200 but this last
transaction was not recorded.
 Ladera returned to Iloilo after the sale and learned of its results. She
went to see the sheriff and upon the latter’s representation that she could
redeem the property, she paid him P230 and the sheriff issued a receipt. It
does not appear, however, that this money was turned over to Hodges.
Thereupon, Ladera spouses filed an action against Hodges, the sheriff, and
the judgment sale purchasers, Magno and Villa to set aside the sale and
recover the house. The lower court ruled in favor of Ladera. Hodges et al
contend that the house being built on land owned by another person
should be regarded in law as movable or personal property.

ISSUE:

Whether the house being built on land owned by another should be

regarded as movable property.

RULING:

According to Article 334 of the Civil Code (now 415), Immovable property
are the following:
“Lands, building, roads, and constructions of all kinds adhering to the
soil;” Applying the principle Ubi lex non distinguit nec nos distinguere
debemu, the law makes no distinction as to whether the owner of the land
is or is not the owner of the building. In view of the plain terms of the
statute, the only possible doubt could arise in the case of a house sold for
demolition.

In the case of immovables by destination, the code requires that they

be placed by the owner of the tenement, in order to acquire the same
nature or consideration of real property. In cases of immovable by
incorporation, the code nowhere requires that the attachment or
incorporation be made by the owner of the land. The only criterion is union
or incorporation with the soil.
 Ladera did not declare his house to be a chattel mortgage. The object
of the levy or sale was real property. The publication in a newspaper of
general circulation was indispensible. It being admitted that no publication
was ever made, the execution sale was void and conferred no title on the
purchaser.

The alleged purchaser at the auction sale, Magno, is a mere employee

of the creditor Hodges and the low bid made by her as well as the fact that
she sold the house to Villa on the same day that Hodges sold him the land,
proves that she was merely acting for and in behalf of Hodges.

It should be noted that in sales of immovables, the lack of title of the

vendor taints the rights of subsequent purchasers. Unlike in sales of
chattels and personality, in transactions covering real property, possession
in good faith is not equivalent to title.

PUNZALAN, JR. VS. VDA. DE LACSAMANA

(G.R. No. L-55729: 28 March 1983)

FACTS:

Antonio Punsalan, Jr was a former owner of a parcel of land situated

in Bamban, Tarlac which Punsalan mortgaged to PNB. Due to failure of
payment of the mortgage, PNB foreclose the property and PNB won the
property in the bidding in a foreclosure proceeding.

While the property is still under the possession of Punsalan, upon

securing a permit from the City Mayor of Tarlac, constructed a warehouse
on said property. Petitioner declared said warehouse for tax purposes and
later on had the warehouse leased to Hermogenes Sibal for a period of 10
years. PNB then executed a deed of sale of the property which was
amended particularly to include in the sale the warehouse and the
improvement thereon.

Punsalan commenced a suit for "Annulment of Deed of Sale with

Damages" against herein respondents PNB and Lacsamana essentially
impugning the validity of the sale of the building as embodied in the
Amended Deed of Sale. Among his allegations was that the bank did not
own the building and thus, it should not be included in the said deed.

Lacsamana averred the affirmative defense of lack of cause of action

in that she was a purchaser for value and invoked the principle in Civil
Law that the "accessory follows the principal". PNB filed a Motion to
Dismiss on the ground that venue was improperly laid considering that the
building was real property under article 415 (1) of the New Civil Code.

ISSUE:

Whether or not the warehouse is considered a movable property under

Article 415 of the Civil Code?

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.
 MIDWAY MARITIME AND TECHNOLOGICAL FOUNDATION VS.
MARISSA E. CASTRO, ET AL.
(G.R. No. 189061: 6 August 2014)

FACTS:

Midway Maritime and Technological Foundation, represented by Dr.

Sabino Manglicmot is the lessee of a two parcels of land. These two parcels
of land were owned by Adoracion Cloma evidenced by two Transfer of
Certificates of Title. Adoracion Cloma is the wife of Dr. Manglicmot.

The two parcels of land were originally owned by Castro’s father.

Castro’s father is the president of Cabanatuan City Colleges (CCC) who
obtained a loan from Bancom Develoment Corporation (BANCOM) by
mortgaging the two parcels of land. During the subsistence of the
mortgage, CCC’s board of directors agreed to a 15-year lease term of the
property to Castro’s children, herein respondents, who subsequently built
a residential house now in dispute.

CCC failed to pay the loan so Bancom foreclosed the mortgage and
then later on assigned the credit to Union Bank of the Philippines.
Adoracion’s father, Tomas Cloma bought the two parcels of land to the
Union Bank during an Auction Sale. He subsequently leased it to
Adoracion and thereafter sold the same.

Petitioner’s Contention:
1. The sale included the improvements, one of which is the residential
building
2. The lease between CCC and respondents already expired at the time
of lease
Respondent’s Contention:
1. They are the real owners of the building
2. Petitioner leased the building from Lourdes Castro, respondent’s
mother as evidenced by the Cash Disbursement Voucher
3. Petitioner failed to pay rents.

ISSUES:

1. Who really owns the residential building?

2. Whether a building built on a parcel of land can be treated as
separate subject of contracts

RULINGS:

1. The residential building belongs to the respondents.

A sale would result in the transmission of title to the buyer which is

feasible only if the seller can be in a position to convey ownership of the
thing sold (Art. 1458 of the Civil Code). It is to say in the instant case that a
foreclosure would be ineffective unless the mortgagor has title to the
property to be foreclosed.

2. Yes, a building built on a parcel of land can be treated as separate

subject of contracts.

Adoracion’s subsequent acquisition of the two parcels of land from

her father does not necessarily entail the acquisition of the residential
building. “A building by itself is a real or immovable property distinct
from the land on which it is constructed and therefore can be a separate
subject of contracts.” Whatever Adoracion acquired from her father is still
subject to the limitation pronounced by the Court in Castro, and the sale
between Adoracion and Tomas is confined only to the two parcels of land
and excluded the residential building owned by the respondents. It is
beyond question that Tomas, and subsequently, Adoracion, could not have
acquired a right greater than what their predecessors-in-interest – CCC and
later, Union Bank – had.

PRUDENTIAL BANK VS. HONORABLE DOMINGO D. PANIS, ET AL.

(G.R. No. L-50008: 31 August 1987)

FACTS:

In 1971, spouses Fernando and Teodula Magcale secured a loan from

Prudential Bank. To secure the loan, the spouses executed a deed of real
estate mortgage in favor of the bank. The real estate under mortgage is a 2-
STOREY, SEMI-CONCRETE, residential building with warehouse spaces
containing a total floor area of 263 sq. meters. The mortgage also includes
the right of occupancy on the lot.

In 1973, the spouses Magcale secured an additional loan from the

same bank. To secure payment of this additional loan, they executed in
favor of the bank another deed of Real Estate Mortgage over the same
properties previously mortgaged.

For failure to pay their obligations to the bank, the deeds of real
estate mortgage were extrajudicially foreclosed. Consequent to the
foreclosure was the sale of the properties mortgaged through a public
auction.

November 1978, the Court of First Instance in Zambales decided that

the deeds of real estate mortgage are null and void. After having the
Motion for Reconsideration of the bank denied, the case was appealed
before the supreme court.
ISSUE:

In their memorandum, the bank raised whether the deeds of real estate
mortgage are valid.

RULING:

The Supreme Court ruled that the deed of real estate mortgage for
the first loan is valid but the real estate mortgage for the additional loan is
null and void.

The SC held that a real estate mortgage over an erected building on a

land belonging to another. The SC explained that under Article 415 of the
Civil Code, the inclusion of building separate from the land means that a
building is by itself an immovable property.

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.

THE STANDARD OIL COMPANY OF NEW YORK VS. JOAQUIN

JARAMILLO
(G.R. No. L-20329: 16 March 1923)

FACTS:

Gervasia de la Rosa, a lessee of a parcel of land and owner of a house

of strong materials built thereon, executed in favor of Standard Oil,
petitioner, a chattel mortgage on both the leasehold interest on said lot and
house. After said document had been duly acknowledged and delivered,
the petitioner caused the same to be presented to the respondent, Joaquin
Jaramillo, as register of deeds, for the purpose of having the same recorded
in the book of record of Chattel Mortgages. Upon examination of the
instrument, J was of the opinion that it was not a chattel mortgage, for the
reason that the interests 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:

Is it the ministerial duty of Joaquin to accept the proper fee and place the
instrument on record?

RULING:

Yes. “The duties of a register of deeds 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.

In Leung Yee v. Frank L. Strong Machinery Co. and Williamson (37

Phil. 644.), this court held that where the interest conveyed is of the nature
of real property, the placing of the document on record in the chattel
mortgage register is a futile act; but that decision is not decisive of the
question now before us, which has reference to the function of the register
of deeds in placing the document on record.’’
OBITER DICTUM

“Articles 334 and 335 [now Arts. 415 and 416] of the Civil Code
supply no absolute criterion for discriminating between real property and
personal property for purposes of the application of the Chattel Mortgage
Law. These articles state rules which, considered as a general doctrine, are
law in this jurisdiction; but it must not be forgotten that under given
conditions, a property may have character different from that imputed to it
in said articles.

It is undeniable that the parties to a contract may, by agreement, treat

as personal property that which by nature would be real property; and it is
familiar phenomenon to see things classed as real property for purposes of
taxation which on general principle might be considered personal
property.

Other situations are constantly arising, and from time to time are
presented to this court, in which the proper classification of one thing or
another as real or personal property may be said to be doubtful.’’

BOARD OF ASSESSMENT APPEALS VS. MANILA ELECTRIC CO.

(G.R. No. L-15334: 31 January 1964)

FACTS:

City Assessor of Quezon City declared the steel towers for real
property tax under Tax Declarations. After denying the respondent’s
petition to cancel these declarations, an appeal was taken with the CTA
which held that the steel towers come under the exception of “poles”
under the franchise given to MERALCO; the steel towers are personal
properties; and the City Treasurer is liable for the refund of the amount
paid.
ISSUE:

Whether or not the steel towers of an electric company constitute real

property for the purposes of real property tax.

RULING:

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;
2. 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;
5. Machinery, receptacles, instruments or implements intended by the
owner of the tenement for an industry or works which may be
carried in a building or on a piece of land, and which tends directly to
meet the needs of the said industry or works.

The steel towers or supports in question, do not come within the objects
mentioned in paragraph 1, because they do not constitute buildings or
constructions adhered to the soil. They are not construction analogous to
buildings nor adhering to the soil. As per description, given by the lower
court, they are removable and merely attached to a square metal frame by
means of bolts, which when unscrewed could easily be dismantled and
moved from place to place. They can not be included under paragraph 3, as
they are not attached to an immovable in a fixed manner, and they can be
separated without breaking the material or causing deterioration upon the
object to which they are attached. Each of these steel towers or supports
consists of steel bars or metal strips, joined together by means of bolts,
which can be disassembled by unscrewing the bolts and reassembled by
screwing the same. These steel towers or supports do not also fall under
paragraph 5, for they are not machineries, receptacles, instruments or
implements, and even if they were, they are not intended for industry or
works on the land. Petitioner is not engaged in an industry or works in the
land in which the steel supports or towers are constructed.

Paragraph 2

INTER-REGIONAL DEVELOPMENT CORPORATION VS. COURT OF

APPEALS AND RICARDO CABALLERO
(G.R. No. L-39677: 22 July 1975)

FACTS:

Ricardo Caballero owns agricultural land and has leased it to Inter-

Regional Development Corp. represented by spouses Jose Bañez and Isabel
Bañez. Conflict started when Caballero sold the land to Isidro Estrada even
though there was still a standing crop to be harvested by the petitioner.
Caballero's argument is that when he sold the land, it follows that
whatever was planted there comes with it. The petitioner for this certiorari
case argues otherwise.

ISSUE:

Whether or not the standing crops is treated as part of a leased land if sold.

RULING:

No. True it is that under article 440 of the Civil Code the ownership
of property includes the right of accession to everything attached thereto
either naturally or artificially, and that under article 415, trees, plants and
growing fruits, while they are attached to the land, are immovable
property; it is equally true that when a person plants in good faith on land
belonging to another, the landowner does not ipso facto acquire ownership
of what has been planted; he must first indemnify the planter before he can
appropriate the same. And so provides article 448: The owner of the land in
which anything has been built, sown or planted in good faith, shall have
the right to appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in articles 546 and 548 ....

LEON SIBAL VS. EMILIANO J. VALDEZ

(G.R. No. L-26278: 4 August 1927)

FACTS:

Vitaliano Mamawal, Deputy sheriff of the Province of Tarlac, by

virtue of a writ of execution issued by the CFI of Pampanga, attached
several properties of Leon Sibal including a sugar cane planted by the latter
on seven parcels of land. Mamawal then sold the aforementioned
properties at a public auction to Emiliano Valdez.

Within one year from the date of attachment and sale, Sibal offered to
redeem the sugar cane and tendered to Valdez the amount sufficient to
cover the price paid by the latter, the interest thereon and any assessments
or taxes which he may have paid thereon after the purchase, and the
interest corresponding thereto. Valdez however, refused to accept the
money and to return the sugar cane on the ground that the sugar cane in
question had the nature of personal property and was not, hence,subject to
redemption.

Sibal prayed in court that a writ of preliminary injunction be issued

against Valdez (1) from distributing the lands; (2) from taking possession
of, or harvesting the sugar cane; and (3) from taking possession, or
harvesting the palay in said parcels of land. Plaintiff also prayed that a
judgment be rendered in his favor and against the defendants ordering
them to consent to the redemption of the sugar cane.

Lower court issued the preliminary injunction prayed for. By way of

counterclaim Valdez, alleged that because of the preliminary injunction he
was unable to gather the sugar cane, sugar-cane shoots andpalay in said
parcels of land, representing loss and damages to him.LC rendered a
judgment against the plaintiff and in favor of the defendants, holding that
the sugar cane in question was a personal property and, as such, was not
subject to redemption.Plaintiff appealed."

ISSUE:

Whether the sugar cane is personal or real property?

RULING:

It is contended that sugar cane comes under the classification of real

property as "ungathered products" in paragraph 2 of article 334 of the Civil
Code. Said paragraph 2 of article 334 enumerates as real property the
following: Trees, plants, and ungathered products, while they are annexed
to the land or form an integral part of any immovable property." That
article, however, has received in recent years an interpretation by the
Tribunal Supremo de España, which holds that, under certain conditions,
growing crops may be considered as personal property.

In some cases "standing crops" may be considered and dealt with as

personal property. In the case of Lumber Co. vs. Sheriff and Tax Collector
(106 La., 418) the Supreme Court said: "True, by article 465 of the Civil
Code it is provided that 'standing crops and the fruits of trees not gathered
and trees before they are cut down . . . are considered as part of the land to
which they are attached, but the immovability provided for is only one in
abstracto and without reference to rights on or to the crop acquired by
others than the owners of the property to which the crop is attached. . . .
The existence of a right on the growing crop is a mobilization by
anticipation, a gathering as it were in advance, rendering the crop movable
quoad the right acquired therein. Our jurisprudence recognizes the
possible mobilization of the growing crop."
 For the purpose of attachment and execution, and for the purposes of
the Chattel Mortgage Law, "ungathered products" have the nature of
personal property. SC lowered the award for damages to the defendant to
8,900.80 by acknowledging the fact that some of the sugar canes were
owned by the petitioner and by reducing the calculated expected yield or
profit that defendant would have made if petitioner did not judicially
prevent him from planting and harvesting his lands.

Paragraph 3

RUBY L. TSAI VS. HON. COURT OF APPEALS, EVER TEXTILE MILLS,

INC. AND MAMERTO R VILLALUZ
(G.R. No. 120098: 2 October 2001)

FACTS:

Ever Textile Mills, Inc. obtained two loans from Philippine Bank of
Communications (PBCom), secured by a deed of Real and Chattel
Mortgage over the lot where its factory stands.

Upon EVERTEX’s failure to meet its obligation to PBCom, PBCom

commenced extrajudicial foreclosure proceedings vs. EVERTEX under Act
3135 and Act 1506 or “The Chattel Mortgage Law”. PBCom consolidated
its ownership over the lot and all the properties in it. It leased and
eventually sold the entire factory premises to Ruby Tsai, including the
contested machineries.

EVERTEX filed a complaint for annulment of sale, reconveyance, and

damages against PBCom, alleging inter alia that the extrajudicial
foreclosure of subject mortgage was not valid and that PBCom, without
any legal or factual basis, appropriated the contested properties which
were not included in the Real and Chattel Mortgage of the first mortgage
contract nor in the second contract which is a Chattel Mortgage, and
neither were those properties included in the Notice of Sheriff’s Sale.
ISSUE:

Whether the contested properties are personal or movable properties

RULING:

Mere nuts and bolts do not foreclose the controversy. We have to

look at the parties’ intent. The nature of the disputed machineries, that they
were heavy, bolted or cemented on the real property mortgaged does not
make them ipso facto immovable under Article 415 (3) and (5) of the New
Civil Code. While it is true that the properties appear to be immobile, a
perusal of the contract of Real and Chattel Mortgage executed by the
parties reveal their intent, that is – to treat machinery and equipment as
chattels.