1. PUNSALAN, JR. V. VDA.

DE LACSAMANA
121 SCRA 331

DOCTRINE: Buildings are always immovable under the Civil Code. Separate treatment by the
parties of building from the land in which it stood does not change the immovable character of the
building.

FACTS:
Punsalan was the owner of a piece of land, which he mortgaged in favor of PNB. Due to his failure to
pay, the mortgage was foreclosed and the land was sold in a public auction to which PNB was the
highest bidder.

On a relevant date, while Punsalan was still the possessor of the land, it secured a permit for the
construction of a warehouse.

A deed of sale was executed between PNB and Punsalan. This contract was amended to include the
warehouse and the improvement thereon. By virtue of these instruments, respondent Lacsamana
secured title over the property in her name.

Petitioner then sought for the annulment of the 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.

Petitioner’s complaint was dismissed for improper venue. The trial court held that the action being
filed in actuality by petitioner is a real action involving his right over a real property.

ISSUE:
Whether or not the warehouse is an immovable and must be tried in the province where the property
lies.

HELD:
Warehouse claimed to be owned by petitioner is an immovable or real property. Buildings are
always immovable under the Civil Code. A building treated separately from the land on which it is
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 did not change its character as immovable
property.

2. PRUDENTIAL BANK V. PANIS

153 SCRA 390

FACTS:
Plaintiff-spouses Magcale secured two loans over a 2-storey residential building.

For failure of the plaintiffs to pay their obligation to defendant Bank after it became due, the deed of
the Real Estate Mortgage were extrajudicially foreclosed.

ISSUE: WON a valid real estate mortgage can be constituted on the building. -- YES

HELD:
Inclusion of building separate and distinct from land, in the provision of law can only mean that a
building is by itself an immovable property. A building by itself may be mortgaged apart from the
land on which it has been built.
 3. LEUNG YEE V. STRONG MACHINERY CO.
G.R. NO. L-11658

DOCTRINE: 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.

FACTS:
Compañia Agricola Filipina bought several rice-cleaning machinery from a machinery company,
Frank L. Strong Machinery Company and executed a chattel mortgage to secure payment of the
purchase price. The deed of mortgage includes the building where the machinery was installed
without any reference to the land on which it stood. Since Compañia Agricola Filipina failed to pay
when due, the mortgaged property was sold by the sheriff and was bought by the machinery
company.

Few weeks later, Compañia Agricola Filipina executed a deed of sale of the land where the building
stood to the machinery company. In effect, the machinery company possessed the building when the
sale took place and continued its possession ever since.

When the chattel mortgage was executed, Compañia Agricola Filipina executed another mortgage in
favor of Yee over the building to pay its debt to the machinery company. Since Compañia Agricola
Filipina failed to pay when due, Yee secured a judgment to levy execution upon the building and
bought the building at the sheriff’s sale; Yee secured the sheriff’s certificate of sale and registered it in
the land registry.

When the execution was levied upon the building, the machinery company filed with the sheriff a
sworn statement setting up its claim of title and demanding the release of property from the levy. On
the other hand, Yee filed an action to recover possession of the building from the machinery company.
Trial court ruled in favor of the machinery company on the basis of Article 1473 of the Civil Code; it
ruled that the machinery company registered the title to the building prior to the registration date of
Yee’s certificate.

ISSUE:
Whether or not the nature of property is changed by its registration in the Chattel Mortgage Registry.
-- NO

HELD:
The registry under Article 1473 of the Civil Code refers to registry of real property and 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.

The Chattel Mortgage Law contemplates mortgages of personal property. The sole purpose and object
of the chattel mortgage registry is the registration of personal property mortgages executed in the
manner and form prescribed in the statute.

In this case, the building where the rice-cleaning machinery was installed was real property. The mere
fact that the parties dealt with it as separate and apart from the land on which it stood does not change
its character as real property. Neither the original registry of the building in the chattel mortgage nor
the annotation of sale of the mortgaged property in the registry had any effect on the building’s nature
as immovable property.

4. STANDARD OIL CO. OF NEW YORK V. JARAMILLO

44 SCRA 630
DOCTRINE: 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.

FACTS:
Gervasia de la Rosa, Vda. de Vera, was the lessee of a parcel of land situated in Manila and owner of
the house built thereon. She executed a chattel mortgage in favor of Standard Oil Co. to convey both
the leasehold interest in said lot and the building. After the document had been duly acknowledge and
delivered, petitioner presented it to the respondent, Joaquin Jaramillo, as ROD of Manila, to be
recorded in the book of record of chattel mortgages. Upon examination of the instrument, Jaramillo
was of the opinion that it was not a chattel mortgage as the interest mortgaged did not appear to be
personal property, within the meaning of the Chattel Mortgage Law, and registration was refused on
this ground only. So, petitioner sought for a peremptory mandamus to compel the respondent to
record the said document in the register. Jaramillo interposed a demurrer before the SC.

ISSUE:
W/N the ROD can refuse the registration of a Chattel Mortgage? NO

HELD:
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.

The original provisions touching this matter are contained in section 15 of the Chattel Mortgage Law
(Act No. 1508), as amended by Act No. 2496; but these have been transferred to section 198 of the
Administrative Code. There is nothing in any of these provisions conferring upon the register of deeds
any authority whatever in respect to the "qualification”, of chattel mortgage. 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 specifies of notice.

Articles 334 and 335 of the Civil Code supply no absolute criterion for discriminating between
real property and personal property for purpose of the application of the Chattel Mortgage Law. Those
articles state rules which, considered as a general doctrine, are law in this jurisdiction; but it must not
be forgotten that under given conditions 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 a familiar phenomenon to see
things classed as real property for purposes of taxation which on general principle might be
considered personal property.

6. LOPEZ V. OROSA
G.R. NOS. L-10817-18, 103 SCRA 98

DOCTRINE: For 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 in the enumeration of what may
constitute real properties could only mean one thing—that a building is by itself an immovable
property

FACTS:
Lopez was engaged in business under the name Lopez-Castelo Sawmill. Orosa, who lived in the same
province as Lopez, one day approached Lopez and invited the latter to make an investment in the
theatre business. Orosa, his family and close friends apparently were forming a corporation named
Plaza Theatre. Lopez expressed his unwillingness to invest. Nonetheless, there was an oral agreement
between Lopez and Orosa that Lopez would be supplying the lumber for the construction of the
theatre. The terms were the following: one, Orosa would be personally liable for any account that the
said construction would incur; two, payment would be by demand and not by cash on delivery.

Pursuant to the agreement, Lopez delivered the lumber for the construction. Lopez was only paid one-
third of the total cost. The land on which the building has been erected was previously owned
by Orosa, which was later on purchased by the corporation. Due to the incessant demands of Lopez,
the corporation mortgaged its properties. On an earlier relevant date, the corporation obtained a loan
with Luzon Surety Company as surety and in turn, the corporation executed a mortgage over the land
and building. In the registration of the land under Act 496, such mortgage wasn’t revealed. Also due
to the demands of Lopez, Orosa issued a deed of assignment over his shares of stock in the
corporation. As there was still an unpaid balance, Lopez filed a case against Orosa and Plaza theatre.
He asked that Orosa and Plaza theatre be held liable solidarily for the unpaid balance; and in case
defendants failed to pay, the land and building should be sold in public auction with the proceeds to
be applied to the balance; or that the shares of stock be sold in public auction. Lopez also
had lis pendens be annotated in the OCT. The trial court decided that there was joint liability between
defendants and that the material man’s lien was only confined to the building.

ISSUE:
W/N the material men’s lien for the value of the materials used in the construction of the building
attaches to said structure alone and doesn’t extend to the land on which the building is adhered to?

HELD:
The contention that the lien executed in favor of the furnisher of materials used for the construction
and repair of a building is also extended to land on which the building was constructed is without
merit. For 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 in the enumeration of what may constitute
real properties could only mean one thing—that a building is by itself an immovable property.
Moreover, 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.
Appellant invoked Article 1923 of the Spanish Civil Code, which provides—“With respect to
determinate real property and real rights of the debtor, the following are preferred: xxx Credits for
reflection, not entered or recorded, and only with respect to other credits different from those
mentioned in four next preceding paragraphs.” Close examination of the abovementioned provision
reveals that the law gives preference to unregistered refectionary credits only with respect to the
real estate upon which the refectionary or work was made. This being so, the inevitable conclusion
must be that 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.

7. SIBAL V. VALDEZ
G.R. NO. L-27532

DOCTRINE: For the purpose of attachment and execution, and for the purposes of the
Chattel Mortgage Law, "ungathered products" have the nature of personal property. (batasnatin)

FACTS:
As a first cause of action the plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff of
the Province of Tarlac, by virtue of a writ of execution issued by the Court of First Instance of
Pampanga, attached and sold to the defendant Emiliano J. Valdez the sugar cane planted by the
plaintiff and his tenants on seven parcels of land. That within one year from the date of the attachment
and sale the plaintiff offered to redeem said sugar cane and tendered to the defendant 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 and
that Valdez refused to accept the money and to return the sugar cane to the plaintiff.

One of the defenses of the defendant Emiliano J. Valdez is that the sugar cane in question had the
nature of personal property and was not, therefore, subject to redemption. The trial court hold that the
sugar cane in question was personal property and, as such, was not subject to redemption.

ISSUE:
Whether the sugar cane in question is personal or real property under civil code? Under
chattel mortgage law?

HELD:
The court ruled that 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."

We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code has been modified by
section 450 of the Code of Civil Procedure and by Act No. 1508, in the sense that, for the purpose of
attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products"
have the nature of personal property. The lower court, therefore, committed no error in holding that
the sugar cane in question was personal property and, as such, was not subject to redemption.

8. DAVAO SAWMILL CO. V. CASTILLO

G.R. NO. 40411,

DOCTRINE: Generally, machinery becomes immobilized when placed by the owner of the plant or
property. This rule does not apply should the machinery be placed by any other person such as a
tenant or usufructuary.

FACTS:
 The petitioner company operates a sawmill in barrio Tigatu, Davao.
 Said facility contained both movable and immovable property (machines and other such
implements).
 However, the land on which it is situated belongs to another person.
 The parties executed a lease contract providing that upon the expiration or termination of
such lease, the following shall happen:
 The ownership of all structures and improvements introduced by the petitioner company shall be
transferred to the respondents without any cost or obligation to pay.
 The machines and their accessories shall not be included in said transfer.
 It was noted by the court that in a previous case between the two parties, judgment was rendered
against the petitioner company upon which a writ of execution was brought against its machines
(as personalty) in favor of Castilllo, et al.
 Additionally, the records of the current case reflected that the petitioner company had treated its
machinery as personal property by executing chattel mortgages on them in favor of third
persons.
 Petitioner company contends that its machines are immovable under the first and fifth paragraphs
of Article 334 (now Article 415) of the Civil Code.

ISSUE:
W/N the machines of the petitioner company are movable or immovable property.

HELD:
The machines are movable.
The court observed that the petitioner company failed to register its protest at the time its machines
were sold. Generally, this inaction would be inconclusive but it is indicative of the intention
impressed upon the property in question.

This is so because while machines are generally movable property, they may nevertheless be
“immobilized” by destination or purpose subject to several conditions.

This conclusion finds its ground under the fifth paragraph of Article 415. Here, machinery becomes
immobilized when placed by the owner of the plant or property. This rule does not apply should the
machinery be placed by any other person such as a tenant or usufructuary.

Applying the rule to the case on hand, the machinery was placed by the petitioner company who was
merely a lessee. As such, the equipment was never immobilized in the first place.

9. MINDANAO BUS COMPANY V. THE CITY ASSESSOR AND TREASURER

G.R. NO. L-17870, SEPTEMBER 29, 1962

FACTS:

Petitioner Mindanao Bus Company is a public utility solely engaged in transporting passengers and
cargoes by motor trucks, over its authorized lines in the Island of Mindanao, collecting rates approved
by the Public Service Commission. Respondent sought to assess the following real properties of the
petitioner; (a) Hobart Electric Welder Machine, (b) Storm Boring Machine; (c) Lathe machine with
motor; (d) Black and Decker Grinder; (e) PEMCO Hydraulic Press; (f) Battery charger (Tungar
charge machine) and (g) D-Engine Waukesha-M-Fuel. It was alleged that these machineries are
sitting on cement or wooden platforms, and that petitioner is the owner of the land where it maintains
and operates a garage for its TPU motor trucks, a repair shop, blacksmith and carpentry shops, and
with these machineries, which are placed therein. Respondent City Assessor of Cagayan de Oro City
assessed at P4, 400 petitioner's above-mentioned equipment. Petitioner appealed the assessment to the
respondent Board of Tax Appeals on the ground that the same are not realty. Respondents contend that
said equipment, though movable, are immobilized by destination, in accordance with paragraph 5 of
Article 415 of the New Civil Code.

ISSUE: Whether the equipments in question are immovable or movable properties.

HELD:

The equipments in question are movable. So that movable equipments to be immobilized in

contemplation of the law, it must first be "essential and principal elements" of an industry or works
without which such industry or works would be "unable to function or carry on the industrial purpose
for which it was established." Thus, the Court distinguished those movable which become
immobilized by destination because they are essential and principal elements in the industry from
those which may not be so considered immobilized because they are merely incidental, not essential
and principal.

The tools and equipments in question in this instant case are, by their nature, not essential and
principle municipal elements of petitioner's business of transporting passengers and cargoes by motor
trucks. They are merely incidentals—acquired as movables and used only for expediency to facilitate
and/or improve its service. Even without such tools and equipments, its business may be carried on,
as petitioner has carried on, without such equipments, before the war. The transportation business
could be carried on without the repair or service shop if its rolling equipment is repaired or serviced in
another shop belonging to another.
 10. AGO VS. COURT OF APPEALS
G.R. NO. L-17898 OCTOBER 31, 1962

FACTS:
Ago bought sawmill machineries and equipment from Grace Park Engineer Domineering, Inc.
(GPED) A chattel mortgage was executed over the said properties to secure the unpaid balance of
P32,000, which Ago agreed to pay in instalment basis. Because Ago defaulted in his payment,
GPED instituted extra-judicial foreclosure proceedings of the mortgage. To enjoin the foreclosure,
Ago instituted a special civil case in the CFI of Agusan. The parties then arrived at a compromise
agreement. However, a year later, Ago still defaulted in his payment. GPED filed a motion for
execution with the lower court, which was executed on September 23,1959. Acting upon the writ of
execution, the Provincial Sheriff of Surigao levied upon and ordered the sale of the sawmill
machineries and equipment. Upon being advised that the public auction sale was set on December
4, 1959, Ago filed a petition for certiorari and prohibition on December 1, 1959 with the CA.
He alleged that his counsel only received the copy of the judgment on September 25, 1959 Ð
two days after the execution of the writ; that the order of sale of the levied properties was in grave
abuse of discretion and in excess of jurisdiction; and that the Sheriff acted illegally by levying the
properties and attempting to sell them without prior publication of the notice of sale thereof in some
newspaper of general circulation as required by the Rules of Court. The CA issued a writ of
preliminary injunction against the Sheriff, but it turned out that the properties were already sold on
December 4, 1959.The CA ordered the Sheriff to suspend the issuance of the Certificate of Sale until
the decision of the case. The CA then rendered its decision on November 9, 1960.
ISSUES:
Was the Sheriff's sale of the machineries and equipment at a public auction valid despite lack
of publication of the notice of sale?
HELD:
No, the subject sawmill machineries and equipment became real estate properties in
accordance with the provision of Art. 415 (5) of the NCC.
The installation of the sawmill machineries in the building of Gold Pacific Sawmill, Inc., for use
in the sawing of logs carried on in the said building converted them into Real Properties as they
became a necessary & permanent part of the building or real estate on which the same was
constructed. And if they are judicially sold on execution without the necessary advertisement of sale
by publication in a newspaper as required in Sec.16 of Rule 39 of the Rules of Court, the sale made
by the sheriff would be null and void.
SEC. 16. Notice of sale of property on execution. — Before the sale of property on execution,
notice thereof must be given as follows:
(c) In case of real property, by posting a similar notice particularly describing the property for
twenty days in three public places in the municipality or city where the property is situated, and also
where the property is to be sold, and, if the assessed value of the property exceeds four hundred
pesos, by publishing a copy of the notice once a week, for the same period, in some newspaper
published or having general circulation in the province, if there be one. If there are newspapers
published in the province in both the English and Spanish languages, then a like publication for a like
period shall be made in one newspaper published in the English language, and in one published in
the Spanish language.
(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 equipment 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.)

11. B.H. Berkenkotter Vs. Cu Unjieng

G.R. No. L-41643 July 31, 1935

FACTS:
This is an appeal taken by the plaintiff, B. H. Berkenkotter, from the judgment of the Court of First
Instance of Manila, dismissing said plaintiff’s complaint against Cu Unjieng e Hijos et al.
Mabalacat Sugar Co., Inc., owner of the sugar central situated in Mabalacat, Pampanga, obtained
from the defendants, Cu Unjieng e Hijos, a loan secured by a first mortgage constituted on two
parcels and land “with all its buildings, improvements, sugar-cane mill, steel railway, telephone line,
apparatus, utensils and whatever forms part or is necessary complement of said sugar-cane mill, steel
railway, telephone line, now existing or that may in the future exist is said lots.”
Shortly after said mortgage had been constituted, the Mabalacat Sugar Co., Inc., decided to increase
the capacity of its sugar central by buying additional machinery and equipment, so that instead of
milling 150 tons daily, it could produce 250. The estimated cost of said additional machinery and
equipment was approximately P100,000. B.A. Green, president of said corporation, proposed to the
plaintiff, B.H. Berkenkotter, to advance the necessary amount for the purchase of said machinery and
equipment, promising to reimburse him as soon as he could obtain an additional loan from the
mortgagees, the herein defendants Cu Unjieng e Hijos. Berkenkotter agreed to the said proposition
and delivered to him a total sum of P25,750. Berkenkotter had a credit of P22,000 against said
corporation for unpaid salary. With the loan of P25,750 and said credit of P22,000, the Mabalacat
Sugar Co., Inc., purchased the additional machinery and equipment now in litigation.
B.A. Green, president of the Mabalacat Sugar Co., Inc., applied to Cu Unjieng e Hijos for an
additional loan of P75,000 offering as security the additional machinery and equipment acquired by
said B.A. Green and installed in the sugar central after the execution of the original mortgage deed,
together with whatever additional equipment acquired with said loan. B.A. Green failed to obtain said
loan.
Appellants contention: the installation of the machinery and equipment claimed by him in the sugar
central of the Mabalacat Sugar Company, Inc., was not permanent in character inasmuch as B. A.
Green, in proposing to him to advance the money for the purchase thereof, that in case B. A. Green
should fail to obtain an additional loan from the defendants Cu Unjieng e Hijos, said machinery and
equipment would become security therefor.
ISSUE:
Whether or not the lower court erred in declaring that the additional machinery and equipment, as
improvement incorporated with the central are subject to the mortgage deed executed in favor of the
defendants Cu Unjieng e Hijos.
HELD:
No error was committed by trial court. The additional machinery and equipment are included in the
first mortgage.
Article 334, paragraph 5, of the Civil Code gives the character of real property to “machinery, liquid
containers, instruments or implements intended by the owner of any building or land for use in
connection with any industry or trade being carried on therein and which are expressly adapted to
meet the requirements of such trade or industry.”
If the installation of the machinery and equipment in question in the central of the Mabalacat
Sugar Co., Inc., in lieu of the other of less capacity existing therein, for its sugar industry,
converted them into real property by reason of their purpose, it cannot be said that their
incorporation therewith was not permanent in character because, as essential and principal
elements of a sugar central, without them the sugar central would be unable to function or
carry on the industrial purpose for which it was established. Inasmuch as the central is
permanent in character, the necessary machinery and equipment installed for carrying on the
sugar industry for which it has been established must necessary be permanent.
Furthermore, the fact that B. A. Green bound himself to the plaintiff B. H. Berkenkotter to hold said
machinery and equipment as security, as nothing could prevent B. A. Green from giving them as
security at least under a second mortgage.
As to the alleged sale of said machinery and equipment to the plaintiff and appellant after they had
been permanently incorporated with the sugar central of the Mabalacat Sugar Co., Inc., and while the
mortgage constituted on said sugar central to Cu Unjieng e Hijos remained in force, only the right of
redemption of the vendor Mabalacat Sugar Co., Inc., in he sugar central with which said machinery
and equipment had been incorporated, was transferred thereby, subject to the right of the defendants
Cu Unjieng e Hijos under the first mortgage.
For the foregoing considerations, we are of the opinion and so hold: (1) That the installation of a
machinery and equipment in a mortgaged sugar central, in lieu of another of less capacity, for the
purpose of carrying out the industrial functions of the latter and increasing production, constitutes a
permanent improvement on said sugar central and subjects said machinery and equipment to the
mortgage constituted thereon (article 1877, Civil Code); (2) that the fact that the purchaser of the new
machinery and equipment has bound himself to the person supplying him the purchase money to hold
them as security for the payment of the latter’s credit, and to refrain from mortgaging or otherwise
encumbering them does not alter the permanent character of the incorporation of said machinery and
equipment with the central; and (3) that the sale of the machinery and equipment in question by the
purchaser who was supplied the money, after the incorporation thereof with the mortgaged sugar
central, does not vest the creditor with ownership of said machinery and equipment but simply with
the right of redemption.

12. MAKATI LEASING AND FINANCIAL CORPORATION V. WEAREVER TEXTILE

MILLS, INC.
G.R. NO. L-58469

DOCTRINE: If a house of strong materials, like what was involved in the above 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 denying the existence of the chattel mortgage.

FACTS:
The private respondent Wearever Textile Mills, Inc., discounted and assigned several receivables with
the former under a Receivable Purchase Agreement in order to obtain financial accommodations from
herein petitioner Makati Leasing and Finance Corporation. To secure the collection of the receivables
assigned, private respondent executed a Chattel Mortgage over certain raw materials inventory as
well as a machinery described as an Artos Aero Dryer Stentering Range.

Upon default, petitioner filed a petition for extrajudicial foreclosure of the properties mortgage to it.
The Deputy Sheriff assigned to implement the foreclosure failed to gain entry into private
respondent's premises and was not able to effect the seizure of the aforedescribed machinery.
Petitioner thereafter filed a complaint for judicial foreclosure with the Court of First Instance of
Rizal.

Acting on petitioner's application for replevin, the lower court issued a writ of seizure, the
enforcement of which was however subsequently restrained upon private respondent's filing of a
motion for reconsideration. After several incidents, the lower court finally issued an order lifting the
restraining order for the enforcement of the writ of seizure and an order to break open the premises of
private respondent to enforce said writ. The lower court reaffirmed its stand upon private respondent's
filing of a further motion for reconsideration.
The Court of Appeals, in certiorari and prohibition proceedings subsequently filed by herein private
respondent, set aside the Orders of the lower court and ordered the return of the drive motor seized by
the sheriff pursuant to said Orders, after ruling that the machinery in suit cannot be the subject of
replevin, much less of a chattel mortgage, because it is a real property pursuant to Article 415 of the
new Civil Code, the same being attached to the ground by means of bolts and the only way to remove
it from respondent's plant would be to drill out or destroy the concrete floor, the reason why all that
the sheriff could do to enfore the writ was to take the main drive motor of said machinery. The
appellate court rejected petitioner's argument that private respondent is estopped from claiming that
the machine is real property by constituting a chattel mortgage thereon.

ISSUE:
Whether or not the property in suit is real property – NO. It is a personal property
HELD:
Examining the records of the instant case, We find no logical justification to exclude the rule out, as
the appellate court did, the present case from the application of the abovequoted pronouncement. If a
house of strong materials, like what was involved in the above 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 denying the existence of the chattel mortgage.

In rejecting petitioner's assertion on the applicability of the Tumalad doctrine, the Court of
Appeals 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 of the subject machinery as chattel by the private
respondent is indicative of 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
real property, as long as no interest of third parties would be prejudiced thereby.

13. Rubiso Vs. Rivera

(27 PHIL 72) G.R. No. L- 11407 October 30, 1917

FACTS: The counsel of plaintiff brought a suit alleging that his clients were the owners of the pilot boat named
Valentine, which has been in bad condition and on the date of the complaint, was stranded in the place called Tingly,
of the municipality of Battings. The defendant Rivera took charge or took possession of the said boat without the
knowledge or consent of the plaintiff and refused to deliver it to them, under the claim that he was the owner
thereof. The refusal on the part of the defendant has caused the plaintiff damages because they were unable to derive
profit from the voyages for which the said pilot boat was customarily used. The defendant, on the other hand,
alleged that they purchased the subject pilot boat. The plaintiff alleged that the sale on behalf of the defendant
Rivera was prior to that made at public auction to Rubio, but the registration of this latter sale was prior to the sale
made to the defendant.

ISSUE: Whether or not, the plaintiff still has the better right over the subject vessel?

HELD: Under the Code of Commerce, Art 573 provides:

Merchant vessels constitute property that may be acquired and transferred by any of the means recognized by law.
The acquisition of a vessel must be included in a written instrument, which shall not produce any effect with regard
to third persons if not recorded in the commercial registry.

The requisite of registration in the registry of the purchase of a vessel is necessary and indispensable in order that
the purchaser’s rights may be maintained against a claim filed by third person. It is undeniable that Rivera’s right
cannot prevail over those acquired by Rubiso in the ownership of the pilot boat, thought the latter’s acquisition of
the vessel at public auction was subsequent to its purchase by the defendant, Rivera.

14. U.S. v. Carlos

21 Phil. 553

DOCTRINE: The true test of what constitutes the proper subject of [theft] is not whether the subject
is corporeal or incorporeal, but whether it is capable of appropriation by another other than the
owner.

FACTS:
Ignacio Carlos has been a consumer of electricity furnished by MERALCO for a building containing
the residence of the accused and 3 other residences. Representatives of the company believing that
more light is consumed than what is shown in the meter installed an additional meter on the pole
outside Carlos’ house to compare the actual consumption and found out that a jumper was used to
manipulate the readings of the first meter. Further, a jumper was found in a drawer of a small cabinet
in the room of the defendant’s house where the meter was installed. In the absence of any explanation
for Carlos’ possession of said device, the presumption raised was that Carlos was the owner of the
device whose only use was to deflect the current from the meter. Thus, he was charged with the crime
of theft amounting to 2,273KW of electric power worth 909.20 pesos.

Carlos claimed that what he did failed to constitute an offense because the crime of theft applies only
to tangibles, chattels and objects that can be taken into possession.

Deliberation quickly followed at the court which subsequently sentenced him to over a year in jail.
Carlos contested saying that electrical energy can’t be stolen because of its nature of being
incorporeal. He filed an appeal on such grounds which the CFI affirmed.

ISSUE:
Whether or not theft can be committed against an intangible such as electricity. -- YES

HELD:
Theft of incorporeal objects is possible. The right of ownership of electrical current was secured by
Art 517 and 518 of the Penal Code which applies to gas.

Analogically, electricity can be considered as ‘gas’ which can be stolen. However, the true test of
what constitutes the proper subject of larceny is not whether the subject is corporeal or incorporeal,
but whether it is capable of appropriation by another other than the owner. It is a valuable article of
merchandise, a force of nature brought under the control of science (under Art. 416 of the New
Civil Code). Carlos secretly and with intent to deprive the company of its rightful property, used
jumper cables to appropriate the same for his own use. Such acts constitute theft.

15. MANGHARAM B. HEMMANI vs. THE EXPORT CONTROL COMMITTEE

G.R. No. L-8414 February 28, 1957

FACTS:
On August 28, 1952, petitioner requested permission from the Export Control Committee to ship his Hudson Sedan,
Model 1949, Motor No. 48149039, valued at P4,500 to Osaka, Japan on board the S.S. President Wilson, “to be used
in connection with his business thereat.” The respondent Committee approved the request on the same day, on
condition that petitioner would file a bond equal to the value of the car, to guarantee the return of the same in the
Philippines within six months from the date of its shipment.

On August 29, 1952, petitioner posted with the Filipinas Compañia de Seguros a surety bond in the sum of P4,500 in
favor of the Republic of the Philippines, guaranteeing that the Hudson Sedan car would be re-exported back to the
Philippines from Japan within six months from the execution of the bond. Accordingly, petitioner took the car in
question to Osaka, Japan, on August 29, 1952, but failed to bring it back to the Philippines as promised. Instead
petitioner filed two requests for extension of six months each to be followed to re-export the car back to the
Philippines until March 1, 1954, alleging that he was still on a business tour and it would be impracticable to return
the car on time. Notwithstanding the two extensions given him by the respondent the car in question was not brought
back in the Philippines.

On February 24, 1954, Atty. Teotimo A. Roja, requested the respondent to order the cancellation of the surety bond
of P4,500 that he and the Filipinas Compañia de Seguros executed alleging that it would be impracticable and
expensive to return the car to Manila considering its dilapidated condition and utility in Japan, but the respondent
denied said request, though at its meeting held on February 24, 1954, it decided to reduce the liability under
the bond to P2,250 for the reason that this was the value that the car would have at the state it was then if it were
brought back in the Philippines thus allowing a depreciation of 56 per cent each year.

ISSUE:
WON the appellants car in question is personal effect and therefore not subject to statutory or reglementary
prohibition against exportation.

HELD:
The word “personal” used with “effects” much restrict its meaning, and certainly (that meaning, cannot be
understanding without any qualifying words includes only such tangible property as attends the person.)
Among the articles the exportation of which is prohibited according to said Executive Order are:
IV. Imported Machinery (light and heavy), mechanical, electrical, agricultural, construction, engineering, and
transportation equipment of all types, including surplus equipment, spare parts, accessories, wires and other allied articles except
those already approved by the Bureau of Customs or NICA or order Government agencies as well as licenses
covered in section 2 herein.

It is undisputed that petitioner’s car is covered with the term “transportation equipment of all types” and not as
“personal effects” as counsel would want to classify it. Petitioner’s car was admittedly brought by him to Osaka,
Japan, “to be used in connection with his business” and that when he asked for extension of time to re-export the
motor vehicle back to the Philippines his reason was that he was still on a business tour.

If by personal effects of passengers in transit transportation equipment used in one’s business were included, then it
would be a simple matter to defeat the intention of the law, that is, to promote the economic and
industrial development of the country. To seal any possible loophole, the executive order made it clear that
exportation of all articles included in the list is prohibited irrespective of the use for which they were intended.

The cardinal rule in the interpretation of law is to ascertain and give effect to the legislative intent and the intention
of the legislature in enacting a law is part of the law itself, and is to be followed and applied, where ascertainable, in
construing apparently convicting provisions. These principles of statutory construction are more true in the case at
bar because the wording of the law is too plain and clear.

15. INVOLUNTARY INSOLVENCY OF STROCHECKER V. RAMIREZ

44 PHIL. 933

DOCTRINE: All personal properties may be mortgaged. Interest in business is personal property
capable of appropriation and not included in the enumeration of real properties under Article 335 of
the Civil Code. Thus, interest in business may be subject of mortgage.

FACTS:
Three mortgages seek preference in the lower court: one in favor of Fidelity and Surety Co., another
in favor of Ramirez, and the last one in favor of Ayala. Ayala’s claim was rejected by trial court from
which she didn’t appeal.

As to the time of the mortgages, the one in favor of Fidelity and Surety Co. is preferred because it was
executed and registered in the registry of property prior to that of Ramirez’s.
However, Ramirez claimed that the mortgage in favor of Fidelity and Surety Co. is invalid because
the property, the half interest in the drug business, is incapable of being mortgaged. Trial court ruled
that the mortgage in favor of Fidelity and Surety Co. is entitled to preference.

ISSUE:
Whether or not one-half interest in the business is capable of being mortgaged. -- YES

HELD:
All personal properties may be mortgaged. Interest in business is personal property capable of
appropriation and not included in the enumeration of real properties under Article 335 of the
Civil Code. Thus, interest in business may be subject of mortgage.

In this case, the mortgaged property of one-half interest in the drug business in favor of Fidelity and
Surety Co. is a valid subject of mortgage.

17. JEREMIAH J. HARTY vs. MUNICIPALITY OF VICTORIA

G.R. No. L-5013, March 11, 1909
FACTS:
The representative of Archbishop Harty, as the legal administrator of all the properties and rights of Catholic Church
within the archdiocese of Manila, filed a complaint against the municipality of Victoria for unlawfully and forcibly
seizing the plaza of the church of Victoria. He alleged that the parish acquired the said parcel of land more than 60
years ago and had continued to possess the same ever since up to 1901.
The municipality denied all the facts stated. It alleged that the plaza was founded when the sitio denominated
Canarum, a barrio of the town of Tarlac, was converted into a civil town in 1855; that the parish of Tarlac was
established many years after the civil town, and that therefore, it neither had then, nor has now any title to the plaza
claimed.

ISSUE: Who is the owner of the plaza?

HELD:
It was a custom observed by all the towns under the old Laws of the Indies to reserve certain amount of land for
plazas, commons, and special and communal property. It was unquestionable that the said large space of land was
left vacant in the center of the town of Victoria when it was constituted as a civil town years before the appointment
of a permanent parish curate therein.

There were good grounds to suppose that the late Vicente Tañedo donated the land now occupied by the church and
the parish house in said municipality for religious purposes, or to the church, but not to the parish curate because at
the time there was no curate at the new town of Victoria.

It had not been satisfactorily shown that the municipality of Victoria had donated the whole of said land to the curate
of Victoria or to the Catholic Church. Neither could it have been donated since it is a public plaza destined to public
use and not private ownership/patrimony of the municipality. The plaza had been used without hindrance by the
public and the residents of the town of Victoria ever since its creation.

That both the curates and the gobernadorcillos of the said town procured fruit trees and plants to be set out in the
plaza, did not constitute an act of private ownership, but evidences the public use.

Therefore, the plaza is of public use and the municipality is absolved of the complaint.

18. City of Manila Vs. Insular Government

THE CITY OF MANILA vs. THE INSULAR GOVERNMENT, ET AL.
(10 Phil., 327)

FACTS:

The city of Manila filed a petition in the Court of Land Registration for the registration of a certain
parcel or tract of land situated in Paco, a district of the said city.The said city alleged that it was the
absolute owner of the said land; that said land was assessed by the city of Manila in the sum of
$1,780; that there existed no liens of whatever character against said land; that the land was
unoccupied; that the said city obtained title to the said land by reason of being the successor to all
the rights and actions of the old city of Manila (ayuntamiento de Manila), to which said property
formerly belonged.

The Insular Government opposed the inscription of the said land to the petitioner’s name upon the
ground that the land in question is the property of the Government of the United States under the
control of the Insular Government.

One of the examiners of titles of the Court of Land Registration made an examination of the title
claimed by the petitioner and reported to the judge of the Court of Land Registration the application
filed by the city of Manila is not accompanied by any document relative to its alleged ownership; that
in the office of the register of deeds there is no record of any act or contract opposing the claim of the
applicant; nor does there appear, from the investigations held, any fact contrary to those quoted in
the application; and that the city of Manila, in order to acquire title to the land above mentioned, must
show the ownership which the former ayuntamiento had over said land. Therefore, the examiner was
of the opinion that the title of the City of Manila is defective and cannot be registered.

The cause was duly brought on for trial and during the trial of said cause the petitioner attempted to
establish that the old city of Manila, its predecessor, had rented said land, had received rents
therefor, and in a general way had administered the same.

The respondent maintained that the land in question was public land, belonging to the Central
Government and the same had never been granted to any person or corporation or municipality by
the Spanish Government.
The judge of the said court granted the registration of the rest of said described property in favor of
the city.

Against this order the respondent gave notice of his intention to appeal.

ISSUE:
Whether or not the questioned property is owned by the city of Manila.

HELD:
No. The Supreme Court ruled that the mere renting of property and receiving the rent therefor
cannot, of themselves, in the absence of other proof, support a claim of ownership of such property.

One of the earliest provisions of law relating to the rights of pueblos in the insular possessions of the
Spanish Government is that of settlements and pueblos of natives.

Article 53 of the Ordinances of Good Government indicates that 1) that the King continued to be the
absolute owner of said lands; 2) that the pueblos were only given the mere usufruct of the same; 3)
that the King might at any time annul such grant; and 4) that a designation, of the particular land so
granted, was a necessary prerequisite for the holding of the same for the purposes indicated, by the
said pueblo.

The municipalities of the Philippine Islands are not entitled, by right, to any part of the public domain
for use as communal lands. The Spanish law provided that the usufruct of a portion of the public
domain adjoining municipal territory might be granted by the Government for communal purposes,
upon proper petition, but, until granted, no rights therein passed to the municipalities, and, in any
event, the ultimate title remained in the sovereign.

The petitioner herein not having presented proof showing that the land in question had been granted
to it by the former sovereign in these Islands, and not having shown that it was entitled to said lands
by virtue of some law of the present sovereign of these Islands, the Court of Land Registration was
not empowered to grant the registration of said lands in favor of said petitioner. The judgment,
therefore, of the lower court is hereby reversed.

19. Tufexis Vs Olaguera

G.R. No. L-9865 December 24, 1915
FACTS:

It was alleged that on September 30, 1911, plaintiff acquired at a public sale held in execution of a
judgment rendered against Ricardo Pardo y Pujol, a piece of property situated in the municipality of
Guinobatan, consisting of a frame building of strong materials with a galvanized-iron roof, erected on
a parcel of land belonging to that municipality and intended for a public market. The plaintiff also
acquired at the sale all the right, interest, title, and participation in the said property that appertained
or might appertain to Pardo y Pujol. The said building was constructed by virtue of a concession
granted by the former Spanish government to Ricardo Pardo y Caba as, father of the judgment
debtor. On January 2, 1912, the said building was totally destroyed by an accidental fire. For several
months thereafter the municipal council of Guinobatan negotiated with plaintiff for the purchase of his
rights in the said concession but such could not be brought to a conclusion because the municipal
council had allegedly acted deceitfully, fraudulently, and in bad faith for the sole purpose of beguiling,
deceiving, and prejudicing plaintiff in order to prevent him from exercising his right to reconstruct the
burned market building and utilize it in accordance with the terms of the said concession. The
defendant municipal council with the other defendant, Francisco Olaguera, had authorized the latter
to take possession of all the land and to occupy the same with booths or stores for the sale of
groceries and other merchandise, for billiard tables, and other analogous. The plaintiff proposed to
construct another public market building on the same land, but that the defendants had prevented
him from using the land and reconstructing thereon the said public market building, and refused to
recognize plaintiff's right and to vacate the land that had been occupied by the burned edifice.
After filing a petition before the CFI of Albay, the provincial fiscal alleged as a ground for the
demurrer that in no part of the instrument of concession did it appear that the privilege granted to the
father of the judgment debtor had likewise been granted to his successors or assignees, and that
therefore such rights and actions could not be conveyed to nor be acquired by any other person. It
was alleged that the building was completely destroyed by fire and that if plaintiff's right to the
possession of the land was conditioned by the existence thereon of the said market building, such
right had terminated by the disappearance of the building.

ISSUE

Whether a the subject building on land belonging to the municipality of Guinobatan which was
intended for a public market, by virtue of a concession could be attached and sold for the payment of
a certain debt owed by Ricardo Pardo y Pujol to a third person who had obtained a final judgment.

RULING

No. The land on which the building was erected and which is referred to in the foregoing articles of
the concession granted by the Government of the former sovereignty belongs to the municipality of
Guinobatan. Although the building was constructed at the expense and with the money of the
grantee, Ricardo Pardo y Caba as, it is, nevertheless, the property of the state or of the said
municipality, and was temporarily transferred to the grantee, Pardo y Caba 帽 as, in
order that he might enjoy the usufruct of its floor space for forty years, but on the termination of this
period the said right of usufruct was to cease and the building was to belong finally and absolutely to
the state or the municipality in representation thereof. For these reasons, there is no question that
the building and the land, on which it was erected, since they did not belong to the grantee, nor do
they belong to his son and heir, Ricardo Pardo y Pujol, could not be attached or sold for the
payment of a debt contracted by the latter. The concession granted by the former Spanish
Government is personal and transferable only by inheritance, and in no manner could it be conveyed
as a special personal privilege to another and a third person. Ricardo Pardo y Pujol is bound to pay
his debts and his property can be attached on petition of his creditors. However, his personal
privilege of usufruct in the floor space of the public market building of Guinobatan cannot be attached
like any ordinary right, because that would mean that a person who has contracted with the state to
furnish a service of a public character would be substituted, for another person who took no part in
the contract, and that the regular course of a public service would be disturbed by the more or less
legal action of the creditors of a grantee, to the prejudice of the state and the public interests. It is
indeed true that the building erected out of the private funds of the grantee, however, judging from
the agreement between him and the Government authorities, he was granted the right to usufruct in
the floor space of the said building in order that, during the period of forty years, he might reimburse
himself for and collect the value of the building constructed by him. So, if neither the land nor the
building in question belongs to Pardo y Pujol, it is evident that they could not be attached or sold at
public auction to satisfy his debt and, consequently, the attachment and sale of the said Government
property executed on petition of the creditor of the said Pardo y Pujol are notoriously illegal, null and
void, and the acquisition of the property by plaintiff confers upon him no right whatever based on the
said concession. The usufruct of the floor space of the public market of Guinobatan, granted to
Ricardo Pardo y Pujol's father was not subject to attachment on account of its being of a public
character. The only right to which the creditor was entitled was to petition for the attachment of the
income and proceeds obtained from the use of the floor space of themarket, but he did not avail
himself of this right. Therefore, the order of dismissal appealed is in accordance with law and the
merits of the case.

20. Tan Toco Vs Mun. Council of Iloilo

FACTS:
The widow of Tan Toco sued the Municipal Council of Iloilo for the amount of P42,966.40
representing the purchase price of a strip of land which was appropriated by the Municipality to
widen a public street. The trial court sentenced the said municipality to pay the amount so claimed,
plus the interest. When the municipality was unable to pay the judgment, the widow obtained a writ
of execution by virtue of which the sheri attached two auto trucks used for street sprinkling, one
police patrol automobile, two police stations, and two markets, including the lots on which they had
been constructed. The provincial fiscal filed a motion praying that the attachment on the said
property be dissolved as being illegal and violative of the rights of the defendant municipality. CFI
granted the motion. Hence this appeal.

ISSUE:
Whether or not the property levied upon is exempt from execution

HELD:
Movable and immovable property of a municipality, necessary for governmental purpose, may
not be attached and sold for the payment of a judgment against the municipality. The supreme
reason for this rule is the character of the public use to which such kind of property is devoted. The
necessity for government service justifies that the property of public of the municipality be exempt
from execution just as it is necessary to exempt certain property of private individuals in accordance
with section 452 of the Code of Civil Procedure. Even the municipal income is exempt from levy and
execution. In volume 1, page 467, Municipal Corporations by Dillon we find that: Municipal
corporations are instituted by the supreme authority of a state for the public good. They exercise, by
delegation from the legislature, a portion of the sovereign power. The main object of their creation is
to act as administrative agencies for the state, and to provide for the police and local government of
certain designated civil divisions of its territory. To this end they are invested with certain
governmental powers and charged with civil, political, and municipal duties. To enable them
beneficially to exercise these powers and discharge these duties, they are clothed with the authority
to raise revenues, chiefly by taxation, and subordinately by other modes as by licenses, fines, and
penalties. The revenue of the public corporation is the essential means by which it is enabled to
perform its appointed work. Deprived of its regular and adequate supply of revenue, such a
corporation is practically destroyed and the ends of its erection thwarted. Based upon considerations
of this character, it is the settled doctrine of the law that only the public property but also the taxes
and public revenues of such corporations cannot be seized under execution against them, either in
the treasury or when in transit to it. Judgments rendered for taxes, and the proceeds of such
judgments in the hands of oicers of the law, are not subject to execution unless so declared by
statute. The doctrine of the inviolability of the public revenues by the creditor is maintained, although
the corporation is in debt, and has no means of payment but the taxes which it is authorized to
collect.

21. PALANCA V. COMMONWEALTH

G.R. NO. 46373

DOCTRINE: A private person may not acquire ownership of a property of public dominion (such as
navigable waters) through prescription or even by virtue of a Torrens title.

FACTS:
On the 17th of July 1919 Carlos Palanca obtained a decision from the Court of First Instance
of Bulacan for the registration of 4 parcels of land, each adjacent to the others and separated only
among them by some waterways called “esteros”. Before the decision is read, the government
through the fiscal general presented a petition for reopening of the case to check on the existence of
“esteros” and rivers that are navigable in the terrain, with the intention of setting/including the said
circumstance in the map and so that it be excluded from the registration.

The Court denied this petition because they consider it unnecessary. Despite its presence
in the terrain, the registration of these will not affect the rights of propriety of the Insular Government
or the public use of the said waterways, which will always remain safe with article 39 of the Law
Register of Propriety.

Much later, the Government of the Islands of the Philippines presented the current action against
Carlos Palanca claiming that he is illegally occupying portions of the Viray River
and Sapang Sedaria “estero’, which are navigable and was asked that he be obliged to open it,
and leave it in its primitive state. The court discontinues this action; but elevated it to the Court of
Appeals.

The Court of Appeals declared that the said River Viray and Sapang Sedaria “estero’ are of the
possession and use of the public and that the right acquired by Carlos Palanca over the land in which
the waterways are located does not affect the right of the State over them, as goods destined for public
use.

Carlos Palanca in his turn elevated an appeal through “certiorari” to this decision of the Court of
Appeals to the Supreme Court.

ISSUE:
What is the status of the river and estero?
HELD:
The river and the “estero” being navigable, useful for commerce, the navigation and fishing, have the
character of public possession and its legal condition in this sense has not been affected by the
possession of Carlos Palance, whenever has been the time of this possession, because it does not
admit any prescription against the State over goods of public use.

The Court of Appeals declared in view of the proofs presented in the case that the River Viray and
the Sapang Sedaria “Estero” are found within the land of Carlos Palanca that was the object of the
decision of the Court of First Instance, and that said river and “estero” are navigable and of common
use, serves as a communication between two courses of water which flows into the Manila Bay, and
that the water current in them are of the possession and use of the public, useful for commerce,
navigation and fishing and that they have these conditions when the land that surrounds them
still pertains to the State.

These being the fact, the request or the recourse opened before this tribunal should be denied, thus
confirming the decision pronounced by the Court of Appeals.

We cannot find basis for the request of the appellant that the decision pronounced by the Court of
First Instance and the Torrens title issued, in its consequence, in favor of Carlos Palanca establish the
non-existence of the river and “estero” in question as navigable. In that decision, it is well said that
the terrain is crossed by some waterways called “esteros”. There is no declaration whatsoever that
these “esteros” are not navigable. On the other hand, when the government asked for opportunity to
prove that some of these “esteros” are navigable, the court denied them this opportunity due to the
reason that, if they really are navigable, the right of the Government over them, by reason of such
condition of the River Viray and the Sapang Sedaria “estero” as navigable, have not been the object of
the judicial decision.

As for the rest, the river and the “estero” being navigable, useful for commerce, the navigation and
fishing, have the character of public possession and its legal condition in this sense has not been
affected by the possession of Carlos Palance, whenever has been the time of this possession, because
it does not admit any prescription against the State over goods of public use.

For these considerations, the appeal is denied and the decision of the court of appeals is confirmed.

22. Insular Govt. Vs. Alcedoa

FACTS
The Attorney-General filed a written complaint in the CFI of Surigao against the firm of Aldecoa & Co., alleging that the
defendant, a mercantile co-partnership company with a branch office in Surigao, continues to operate as such mercantile
co-partnership company under the name of Aldecoa & Co.,; that the said defendant, knowing that it had no title or right
whatever to two adjoining parcels of land has been occupying them illegally for the past seventeen years, more or less, having
constructed on the land a wharf, located along the railroad, and built warehouses of light material for the storage of coal — all
for its exclusive use and benefit. These lands, situated in Surigao,belonged to the late Spanish Government in the
Philippines and are now the property of the government of the United States and were placed under the control of the Insular
Government-since the year 1901, the defendant has been requested repeatedly by the Attorney-General, in representation of the
Insular Government, to recognize the latter's right of dominion over the same and to deliver to it the said property, and that, by
reason of such demands, Aldecoa & Co. agreed to return the land, but that later, after several delays, it concluded by
persisting in its attempt illegally tocontinue occupying the said land and refused to return it to the Insular Government. The
defendantalleged that it held and possessed, as owner, and had full and absolute dominion over, the landsclaimed by the plaintiff.
CFI rendered judgment and found that the land in question was public landand belonged to the State, and ordered the defendant to
return it to the plaintiff.
ISSUE
Whether the subject lands as claimed by the defendant is a part of the public dominion.
RULING Yes. It is incontrovertible that the land in question is of the public domain and belongs tothe State, inasmuch as at the
present time it is partly shore land and in part, was such formerly, andnow is land formed by the action of the sea. On the
supposition that Aldecoa & Co. commenced tooccupy the land and shore herein concerned, prior to the enforcement of the Civil
Code in theseIslands, it is unquestionable that the issue must be determined in accordance with the provisions of the Law of Waters
of August 3, 1866, inasmuch as the shores, as well as the lands united thereto by the accretions and alluvium deposits produced by
the action of the sea, are of the public use and domain. All this said land, together with the adjacent shore, belongs to the public
domain and is intended for public uses. Thus, the defendant, in construction on the two aforementioned parcels of land a retaining
wall, a pier or wharf, a railway, and warehouses for the storage of coal, for exclusive use and benefit, did all this without due and
competent authority and has been illegally occupying the land since 1901. Aldecoa & Co. endeavored to prove that the land,
consisting of the two united parcels, belonged to them in fee simple, on account of their having begun to occupy it-through a verbal
permit from the then politico-military governor of Surigao. The said permit was a verbal authorization to occupy the land on
condition that the defendant should later on prepare title deeds thereto, and that this authorization was granted for the purpose of
furnishing facilities to, and benefiting the merchants of Surigao, in view of the backward condition of things in those regions at the
time. It is certain, however, that Aldecoa & Co. did not obtain or solicit permission from the government to establish themselves
there and erect thereon their buildings and works, nor did they endeavor to obtain any title of ownership to the said land. Defendant
has not proven that it obtained for itself, in conformity with the provisions of the said Law of Waters. The Civil Code,
which went into effect in these Islands on December 7, 1889, confirms the provisions of the said Law of Waters. The-shores and
the lands reclaimed from the sea, while they continue to be devoted to public uses and no grant whatever has been made of any
portion of them to private persons, remain a part of the public domain and are for public uses, and, until they are converted into
patrimonial property of the state. Inasmuch as, being dedicated to the public uses, they are not subject of commerce among men, in
accordance with the provision of the Civil Code. The record does not disclose that Aldecoa &Co. had obtained from the Spanish
Government of the Philippines the requisite authorization legally to occupy the said two parcels of land of which they now claim to
be the owners. Wherefore, the occupation or possession which they allege they hold is a mere detainer that can merit
from the law no protection such as is afforded only to the person legally in possession.
23. Govt. Vs. Cabangis
24. Martinez Vs. Court of Appeals

25. People Vs. Jacobo

G.R. No. L-14151 April 28, 1960

FACTS
The record discloses that the present case originated with an information filed in the Justice of the Peace Court of
Guiguinto, Bulacan, charging Encarnacion Jacobo with having violated an order of the Secretary of Public Works and
Communications directing her to remove whatever obstruction she have may placed in the bed of Sapang Cabay and to
restore the bed of said stream to its original condition within 30 days from her receipt of said order. Trial of the case
was held in the said court, after which the justice of the peace held that the evidence shows beyond reasonable doubt
that the accused was guilty of the charge. So she was fined in the sum of P20.00, with costs. Against the said judgment
the appeal was prosecuted to the Court of First Instance where a new information was filed by the provincial fiscal.
The Solicitor General has appealed from the above order, and in his Brief he argues that according to
the motion to quash itself, one Petra Gatmaitan occupied to 1936 a portion of Sapang Cabay; that said
Petra Gatmaitan transferred her rights to Modesto Pascual who, in turn, transferred his rights to the
defendant; that the latter applied for a free patent which was granted by the Secretary of Agriculture and
Natural Resources on December 29, 1953; and that an original certificate of the title was issued to
defendant on February 4, 1954. The order of the Secretary of Agriculture and Natural Resources, which
ordered defendant to remove the gate of her fishpond on the ground that the said gate was obstructing a
public stream, was rendered on November 16, 1955.

ISSUE
Whether or not the defendant is the legal owner and absolute owner of the “stream”

HELD
Yes. The defendant is the legal and absolute owner of the stream. There is no allegation in the information that the
Sapang Cabay is a river within the meaning of Article 420 of the Civil Code. The name of the stream itself indicates
that it is only a creek. It concluded that it is only after the stream has been declared a PUBLIC STREAM by the
COURTS, that a private person, claiming ownership thereof, may be held liable for maintaining an obstruction thereon.

26. MUN. OF HINUNGANAN VS. DIR. OF LANDS

G.R. NO. L-7054 JANUARY 20, 1913
FACTS:

A parcel of land situated in the municipality of Hinunangan, Province of Leyte, which contains an area
of 10,328.8 square meters. It is bounded on the northeast by the maritime zone; on the southeast by
North America Street; on the southwest by Manilili Street, and on the northwest by San Isidro Labrador
Street. Upon this lot is built a stone fort which has stood there from time immemorial and was in times
past used as a defense against the invasion of the Moros. But for many years it has no longer been
used for the purposes for which it was originally built.
ISSUE: W/N the title to the land can be registered to the municipality.

RULING:

The fact that said fortress may not have been used for many years for the purposes for which it was
originally built does not of necessity deprive the state of its ownership therein. As we have seen, the
Civil Code provides that, when the fortress ceases to be used for the purposes for which it was
constructed, it becomes the property of the state in what may be called the private sense. That the
municipality may have exercised within recent years acts of ownership over the land by permitting it to
be occupied and consenting to the erection of private houses thereon does not determine necessarily
that the land has become the property of the municipality. We have held in several cases that, where
the municipality has occupied lands distinctly for public purposes, such as for the municipal court
house, the public school, the public market, or other necessary municipal building, we will, in the
absence of proof to the contrary, presume a grant from the state in favor of the municipality; but, as
indicated by the wording, that rule may be invoked only as to property which is used distinctly for public
purposes. It cannot be applied against the state when occupied for any other purpose. The evidence
does not disclose that the municipality has used the land for purposes distinctly public.

27. Montano Vs. Insular Govt.

ISABELO MONTANO Y MARCIAL vs. THE INSULAR GOVERNMENT, ET AL.

FACTS:
Isabelo Montano presented a petition to the Court of Land Registration for the inscription of a piece of land in the
barrio of Libis, municipality of Caloocan, used as a fishery having a superficial area of 10,805 square meters, and
bounded as set out in the petition; its value according to the last assessment being $505.05, United States currency.
This petition was opposed by the Solicitor-General in behalf of the Director of Lands, and by the entity known asObras
Pias de la Sagrada Mitra, the former on the ground that the land in question belonged to the Government of the United
States, and the latter, that it was the absolute owner of all the dry land along the eastern boundary of the said fishery.
The Court of Land Registration in its decision of December 1, 1906, dismissed the said oppositions without costs and
decreed, after a general entry by default, the adjudication and registration of the property described in the petition, in
favor of Isabelo Montano y Marcial. From this decision only counsel for the Director of Public Lands appealed to this
court. and precisely Isabelo Montano sought title thereon on the strength of 10 years' occupation pursuant to paragraph
6, section 5 of Act 926 of the Philippine Commission

ISSUE:
Whether or not the land in question can be acquired by Montano

HELD:
Accordingly, "government land" and "public domain" are not synonymous items. The first includes not only the
second, but also other lands of the Government already reserved or devoted to public use or subject to private right. In
other words, the Government owns real estate which is part of the "public lands" and other real estate which is not part
thereof. Government property was of two kinds — first, that of public use or service, said to be of public ownership,
and second, that of having a private character or use. (Civil Code, arts. 339 and 340.) Lands of the first class, while
they retain their public character are inalienable. Those of the second are not. Therefore, there is much real property
belonging to the Government which is not affected by statutes for the settlement, prescription or sale of public lands.
Examples in point are properties occupied by public buildings or devoted to municipal or other governmental uses.

It is settled that the general legislation of Congress in respect to public lands does not extend to tide lands. It provided
that the scrip might be located on the unoccupied and unappropriated public lands. As said inNewhall vs. Sanger(92
U.S. 761, 763.) A marshland which is inundated by the rise of tides belong to the State and is not susceptible to
appropriation by occupation, has no application in the present case inasmuch as in said case the land subject matter of
the litigation was not yet titled

28. Dream Village Neighborhood Assoc. Inc. Vs. Bases Conversion Development Authority

29. HEIRS OF MARIO MALABANAN VS. REPUBLIC OF THE PHILIPPINES

FACTS:
On 20 February 1998, Mario Malabanan filed an application for land registration before the RTC of
Cavite-Tagaytay, covering a parcel of land situated in Silang Cavite, consisting of 71,324 square
meters. Malabanan claimed that he had purchased the property from Eduardo Velazco, and that he
and his predecessors-in-interest had been in open, notorious, and continuous adverse and peaceful
possession of the land for more than thirty (30) years. Velazco testified that the property was
originally belonged to a twenty-two hectare property owned by his great-grandfather, Lino Velazco.
Lino had four sons– Benedicto, Gregorio, Eduardo and Esteban–the fourth being Aristedes’s
grandfather. Upon Lino’s death, his four sons inherited the property and divided it among
themselves. But by 1966, Esteban’s wife, Magdalena, had become the administrator of all the
properties inherited by the Velazco sons from their father, Lino. After the death of Esteban and
Magdalena, their son Virgilio succeeded them in administering the properties, including Lot 9864-A,
which originally belonged to his uncle, Eduardo Velazco. It was this property that was sold by
Eduardo Velazco to Malabanan. Among the evidence presented by Malabanan during trial was a
Certification dated 11 June 2001, issued by the Community Environment & Natural Resources Office,
Department of Environment and Natural Resources (CENRO-DENR), which stated that the subject
property was “verified to be within the Alienable or Disposable land per Land Classification Map No.
3013 established under Project No. 20-A and approved as such under FAO 4-1656 on March 15,
1982.” On 3 December 2002, the RTC approved the application for registration. The Republic
interposed an appeal to the Court of Appeals, arguing that Malabanan had failed to prove that the
property belonged to the alienable and disposable land of the public domain, and that the RTC had
erred in finding that he had been in possession of the property in the manner and for the length of
time required by law for confirmation of imperfect title. On 23 February 2007, the Court of Appeals
reversed the RTC ruling and dismissed the appliocation of Malabanan.

ISSUES:
1. In order that an alienable and disposable land of the public domain may be registered under
Section 14(1) of Presidential Decree No. 1529, otherwise known as the Property Registration
Decree, should the land be classified as alienable and disposable as of June 12, 1945 or is it
sufficient that such classification occur at any time prior to the filing of the applicant for registration
provided that it is established that the applicant has been in open, continuous, exclusive and
notorious possession of the land under a bona fide claim of ownership since June 12, 1945 or
earlier?
2. For purposes of Section 14(2) of the Property Registration Decree may a parcel of land classified
as alienable and disposable be deemed private land and therefore susceptible to acquisition by
prescription in accordance with the Civil Code?
3. . May a parcel of land established as agricultural in character either because of its use or because
its slope is below that of forest lands be registrable under Section 14(2) of the Property Registration
Decree in relation to the provisions of the Civil Code on acquisitive prescription?
4. Are petitioners entitled to the registration of the subject land in their names under Section 14(1) or
Section 14(2) of the Property Registration Decree or both?

HELD:
The Pertition is denied.
(1) In connection with Section 14(1) of the Property Registration Decree, Section 48(b) of the Public
Land Act recognizes and confirms that “those who by themselves or through their predecessors in
interest have been in open, continuous, exclusive, and notorious possession and occupation of
alienable and disposable lands of the public domain, under a bona fide claim of acquisition of
ownership, since June 12, 1945” have acquired ownership of, and registrable title to, such lands
based on the length and quality of their possession. (a) Since Section 48(b) merely requires
possession since 12 June 1945 and does not require that the lands should have been alienable and
disposable during the entire period of possession, the possessor is entitled to secure judicial
confirmation of his title thereto as soon as it is declared alienable and disposable, subject to the
timeframe imposed by Section 47 of the Public Land Act. (b) The right to register granted under
Section 48(b) of the Public Land Act is further confirmed by Section 14(1) of the Property
Registration Decree.
(2) In complying with Section 14(2) of the Property Registration Decree, consider that under the Civil
Code, prescription is recognized as a mode of acquiring ownership of patrimonial property. However,
public domain lands become only patrimonial property not only with a declaration that these are
alienable or disposable. There must also be an express government manifestation that the property
is already patrimonial or no longer retained for public service or the development of national wealth,
under Article 422 of the Civil Code. And only when the property has become patrimonial can the
prescriptive period for the acquisition of property of the public dominion begin to run. (a) Patrimonial
property is private property of the government. The person acquires ownership of ‹ Home › View web
version Elmer Brabante at 8:50 AM patrimonial property by prescription under the Civil Code is
entitled to secure registration thereof under Section 14(2) of the Property Registration Decree. (b)
There are two kinds of prescription by which patrimonial property may be acquired, one ordinary and
other extraordinary. Under ordinary acquisitive prescription, a person acquires ownership of a
patrimonial property through possession for at least ten (10) years, in good faith and with just title.
Under extraordinary acquisitive prescription, a person’s uninterrupted adverse possession of
patrimonial property for at least thirty (30) years, regardless of good faith or just title, ripens into
ownership. It is clear that the evidence of petitioners is insufficient to establish that Malabanan has
acquired ownership over the subject property under Section 48(b) of the Public Land Act. There is no
substantive evidence to establish that Malabanan or petitioners as his predecessors-in-interest have
been in possession of the property since 12 June 1945 or earlier. The earliest that petitioners can
date back their possession, according to their own evidence—the Tax Declarations they presented in
particular—is to the year 1948. Thus, they cannot avail themselves of registration under Section
14(1) of the Property Registration Decree. Neither can petitioners properly invoke Section 14(2) as
basis for registration. While the subject property was declared as alienable or disposable in 1982,
there is no competent evidence that is no longer intended for public use service or for the
development of the national evidence, conformably with Article 422 of the Civil Code. The
classification of the subject property as alienable and disposable land of the public domain does not
change its status as property of the public dominion under Article 420(2) of the Civil Code. Thus, it is
insusceptible to acquisition by prescription.

30. Province of Camarines Sur Vs. Court of Appeals