Makati Leasing and Finance Corp., vs Wearever Textile Mills, Inc.

,
122 SCRA 296
FACTS
Wearever Textile Mills, Inc. executed a chattel mortgage contract in favor of Makati Leasing and
Finance Corporation covering certain raw materials and machinery. Upon default, Makati Leasing fi
led a petition for judicial foreclosure of the properties mortgaged. Acting on Makati Leasings
application for replevin, the lower court issued a writ of seizure. Pursuant thereto, the sheriff enforcing
the seizure order seized the machinery subject matter of the mortgage. In a petition for certiorari and
prohibition, the Court of Appeals ordered the return of the machinery on the ground that the same
can-not be the subject of replevin because it is a real property pursuant to Article415 of the new Civil
Code, the same being attached to the ground by means of bolts and the only way to remove it from
Wearever textiles plant would be to drill out or destroy the concrete fl oor. When the motion for
reconsideration of Makati Leasing was denied by the Court of Appeals, Makati Leasing elevated the
matter to the Supreme Court.
ISSUE
Whether the machinery in suit is real or personal property from the point of view of the parties.
HELD
There is no logical justification to exclude the rule out the present case from the application of the
pronouncement in Tumalad v Vicencio, 41 SCRA 143. If a house of strong materials, like what was
involved in the Tumalad case, may be considered as personal property for purposes of executing a
chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party
will be prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its
nature and becomes immobilized only by destination or purpose, may not be likewise treated as such.
This is really because one who has so agreed is estopped from the denying the existence of the
chattel mortgage.
In rejecting petitioners assertion on the applicability of the Tumalad doctrine, the CA lays stress on
the fact that the house involved therein was built on a land that did not belong to the owner of such
house. But the law makes no distinction with respect to the ownership of the land on which the house
is built and We should not lay down distinctions not contemplated by law.
It must be pointed out that the characterization by the private respondent is indicative of the intention
and impresses upon the property the character determined by the parties. As stated in Standard Oil
Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract may, by
agreement, treat as personal property that which by nature would be a real property as long as no
interest of third parties would be prejudiced thereby.

The status of the subject matter as movable or immovable property was not raised as an issue before
the lower court and the CA, except in a supplemental memorandum in support of the petition filed in

the appellate court. There is no record showing that the mortgage has been annulled, or that steps
were taken to nullify the same. On the other hand, respondent has benefited from the said contract.
Equity dictates that one should not benefit at the expense of another.As such, private respondent
could no longer be allowed to impugn the efficacy of the chattel mortgage after it has benefited
therefrom.Therefore, the questioned machinery should be considered as personal property.

Luis Marcos Laurel vs Hon. Zeus Abrogar

GR No. 155076
FACTS
Laurel was charged with Theft under Art. 308 of the RPC for allegedly taking, stealing, and using
PLDT's international long distance calls by conducting International Simple Resale (ISR) a method
of outing and completing international long-distance calls using lines, cables, antennae, and/or air
wave frequency which connect directly to the local/domestic exchange facilities of the country where
the call is destined. PLDT alleged that this service was stolen from them using their own equipment
and caused damage to them amounting to P20,370,651.92.
PLDT alleges that the international calls and business of providing telecommunication or telephone
service are personal properties capable of appropriation and can be objects of theft.
ISSUE
WON Laurel's act constitutes Theft
HELD
Art.308, RPC: Theft is committed by any person who, with intent to gain but without violence against,
or intimidation of persons nor force upon things, shall take personal property of another without the
latters consent.
Elements of Theft under Art.308, RPC: There be taking of Personal Property, Said Personal Property
belongs to another, Taking be done with Intent to Gain, Taking be done without the owners consent,
No violence against, or intimidation of, persons or force upon things
Personal Property anything susceptible of appropriation and not included in Real Property.
Thus, the term personal property as used in Art.308, RPC should be interpreted in the context of the
Civil Code's definition of real and personal property. Consequently, any personal property, tangible or
intangible, corporeal or incorporeal, capable of appropriation may be the subject of theft (*US v
Carlos; US v Tambunting; US v Genato*), so long as the same is not included in the enumeration of
Real Properties under the Civil Code.
The only requirement for personal property to capable of theft, is that it be subject to appropriation.
Art. 416 (3) of the Civil Code deems Forces of Nature which are brought under the control of
science, as Personal Property.
The appropriation of forces of nature which are brought under control by science can be achieved by
tampering with any apparatus used for generating or measuring such forces of nature, wrongfully
redirecting such forces of nature from such apparatus, or using any device to fraudulently obtain such
forces of nature.

In the instant case, the act of conducting ISR operations by illegally connecting various equipment or
apparatus to PLDTs telephone system, through which petitioner is able to resell or re-route
international long distance calls using PLDTs facilities constitute Subtraction.
Moreover, interest in business should be classified as personal property since it is capable of
appropriation, and not included in the enumeration of real properties.
Therefore, the business of providing telecommunication or telephone service are personal property
which can be the object of theft under Art. 308 of the RPC. The act of engaging in ISR is an act of
subtraction penalized under the said article.
While international long-distance calls take the form of electrical energy and may be considered as
personal property, the said long-distance calls do not belong to PLDT since it could not have acquired
ownership over such calls. PLDT merely encodes, augments, enhances, decodes and transmits said
calls using its complex communications infrastructure and facilities.
Since PLDT does not own the said telephone calls, then it could not validly claim that such telephone
calls were taken without its consent.
What constitutes Theft is the use of the PLDT's communications facilities without PLDT's consent.
The theft lies in the unlawful taking of the telephone services & businesses.
The Amended Information should be amended to show that the property subject of the theft were
services and business of the offended party.

Caltex vs Central Board of Assessment Appeals & City Assessor of Pasay

GR No. L-50466
FACTS
Caltex loaned machines and equipment to gas station operators under an appropriate lease
agreement or receipt. The lease contract stipulated that upon demand, the operators shall return to
Caltex the machines and equipment in good condition as when received, ordinary wear and tear
excepted.The lessor of the land, where the gas station is located, does not become the owner of the
machines and equipment installed therein. Caltex retains the ownership thereof during the term of the
lease.The City Assessor of Pasay City characterized the said items of gas station equipment and
machinery as taxable realty. However, the City Board of Tax Appeals ruled that they are personalty.
The Assessor appealed to the Central Board of Assessment Appeals.
The Board held on June 3, 1977 that the said machines are real property within the meaning of Ses.
3(k) & (m) and 38 of the Real Property Tax Code, PD 464, and that the Civil Code definitions of real
and personal property in Articles 415 and 416 are not applicable in this case.
ISSUE
WON the pieces of gas station equipment and machinery permanently affixed by Caltex to its gas
station and pavement should be subject to realty tax.
HELD
Sec.2 of the Assessment Law provides that the realty tax is due on real property, including land,
buildings, machinery, and other improvements not specifically exempted in Sec.3 thereof.
Sec.3 of the Real Property Tax Code provides the following definitions:
k) Improvements a valuable addition made to property or an amelioration in its conditionmore
than mere repairs or replacement of wasteintended to enhance its value, beauty, or utility
m) Machinery machines, mechanical contrivances, instruments, appliances, and apparatus
attached to the real estateincludes the physical facilities available for productioninstallation and
appurtenant service facilities.
The subject machines and equipment are taxable improvement and machinery within the meaning of
the Assessment Law and the Real Property Tax Code, because the same are necessary to the
operation of the gas station and have been attached/affixed/embedded permanently to the gas station
site.
Improvements on land are commonly taxed as realty even though they might be considered
personalty. It is a familiar phenomenon to see things classified as real property for purposes of
taxation which on general principle might be considered personal property (Standard Oil Co., vs
Jaramillo, 44 PHIL 630).

This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co.,
(119 Phil. 328) where Meralco's steel towers were exempted from taxation. The steel towers were
considered personalty because they were attached to square metal frames by means of bolts and
could be moved from place to place when unscrewed and dismantled.
Nor are Caltex's gas station equipment and machinery the same as the tools and equipment in the
repair shop of a bus company which were held to be personal property not subject to realty tax
(Mindanao Bus Co. vs. City Assessor, 116 Phil. 501).
The Central Board of Assessment Appeals did not commit a grave abuse of discretion in upholding
the City Assessor's imposition of the realty tax on Caltex's gas station and equipment.