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COMMISSIONER OF CUSTOMS vs CAPISTRANO of domestic circulation as legal tender and treated as commodity.
G.R. No. L-11075, June 30, 1960 Hence, they may be forfeited pursuant to C.B. Circular No. 37 in
relation to Sec. 1363 (f) of the Revised Administrative Code.
TOPIC: DEFINITION OF PROPERTY; THING DISTINGUISHED
FROM PROPERTY [Art 414]; COMMERCIAL LAW; CENTRAL DE LEON V. SALVADOR
BANK ACT GR NO L-30871, 28 DECEMBER 1970
TOPIC: DEFINITION OF PROPERTY; THING DISTINGUISHED
PRINCIPLE: PHILIPPINE PESO BILLS WHEN ATTEMPTED TO FROM PROPERTY [Art 414]; DEPENDENCE or IMPORTANCE;
BE EXPORTED ARE CONSIDERED AS MERCHANDISE CAPABILITY OF SUBSTITUTION; NATURE OR DEFINITENESS
SUBJECT TO FORFEITURE.
PRINCIPLE: PRICE ON FORCED SALES DISTINGUISHED
FACTS: FROM PRICE ON ORDINARY SALES In ordinary sales, by
156 pieces of Philippine 50-peso bills, 17 pieces of U.S. 20-dollar reasons of equity, a transaction may be invalidated on the ground of
bills and 1 piece of U.S. 10-dollar bill were found in the person of inadequacy of price. In forced sales, as when a sale is made at a
Caridad Capistrano when she was searched by an agent of the public auction, the owner has the right to redeem. When there is a
Bureau of Customs before the plane which she was to board took right to redeem, inadequacy of price is immaterial because
off for Hongkong. Her license from the Central Bank allowed her to judgment debtor can better acquire the property or also sell his right
carry only $200, broken down into $50 in cash and $150 in to redeem and thus recover the loss he claims to have suffered by
traveller's check. Consequently, the bills were seized and ordered reason of the price obtained from the auction sale.
forfeited in favor of the government for alleged violation of Central
Bank Circular Nos. 42 and 55, in relation with Sec. 1363 (f) of the FACTS: Eusebio Bernabes (judgment debtor) properties were
Revised Administrative Code. garnished and sold in an auction sale to satisfy a judgment in a civil
case for damages, ordered by the court of Judge Fernando Cruz, in
ISSUE: Do Philippine peso bills come within the concept of
"merchandise" as this term is used in Sec. 1363 (f) of the Revised favor of Enrique De Leon. The highest bidder for the total sum of
Administrative Code? P30,194.00 was Aurora de Leon, sister of judgment creditor and
herein petitioner. Bernabe was given a redemption period of 1 year
RULING: YES, Philippine peso bills come within the concept of commencing from the time of the auction sale, however, instead of
"merchandise" as this term is understood in Sec. 1363 (f) of the redeeming his properties, he filed a case to annul the auction sale
Revised Administrative Code. As defined by the same code, on the ground of gross inadequacy of price and for the ordering of a
merchandise, when used with reference to importations, includes
new auction sale. He claimed that his properties, taken together,
goods, wares, and in general anything that may be the subject of
importation or exportation (Sec. 1419). In the same manner that in can cost around P400,000.00. This second case was assigned to
the Philippines, the U.S. dollar bills which have ceased to be legal the court of Judge Serafin Salvador who issued a writ of injunction
tender are considered merchandise, the Philippine bills when against respondents and summarily granted the motions of
attempted to be exported may be deemed to have been taken out
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Bernabe. Hence, Aurora files this case questioning the jurisdiction ISSUE: Whether a register of deeds has authority to deny the
of Judge Salvador to issue such orders. registration of a document purporting to be a chattel mortgage and
executed in the manner and form prescribed by the Chattel
ISSUE: Can the auction sale be annulled on the ground of Mortgage Law.
inadequacy of price? RULING: NO. The duties of a register of deeds in respect to the
registration of chattel mortgages are of purely ministerial character
RULING: NO. In ordinary sales, by reasons of equity, a transaction and no provision of law can be cited which confers upon him any
may be invalidated on the ground of inadequacy of price. In forced judicial or quasi-judicial power to determine the nature of any
sales, as when a sale is made at a public auction, the owner has document of which registration is sought as a chattel mortgage. The
the right to redeem. When there is a right to redeem, inadequacy of efficacy of the act of recording a chattel mortgage consists in the
price is immaterial because judgment debtor can better acquire the fact that it operates as constructive notice of the existence of the
property or also sell his right to redeem and thus recover the loss contract, and the legal effects of the contract must be discovered in
he claims to have suffered by reason of the price obtained from the the instrument itself in relation with the fact of notice. Registration
auction sale. adds nothing to the instrument, considered as a source of title, and
affects nobodys rights except as a species of notice.
STANDARD OIL CO. OF NEW YORK VS. JARAMILLO The parties to a contract may by agreement treat as personal
44 PHIL 630 property that which by nature would be real property and it is a
familiar phenomenon to see things classed as real property for
FACTS: Gervasia dela Rosa executed a document in the form of a purposes of taxation which on general principle might be
Chattel Mortgage to convey to Standard Oil Co. by way of mortgage considered personal property.
both the interest of the land she leases in Manila and the building In an administrative ruling promulgated by the Honorable James A.
which stands thereon. The documents describe the property as Ostrand, his honor said:
personal including the right, title and interest of the mortgagor in Based principally upon the provisions of section quoted the
and to the contract of lease and also the building of the said Attorney-General of the Philippine Islands, in an opinion dated
premises therein. After said document had been duly acknowledge August 11, 1909, held that a register of deeds has no authority to
and delivered, the petitioner presented it to Joaquin Jaramillo, as pass upon the capacity of the parties to a chattel mortgage which is
register of deeds of the City of Manila, for the purpose of having the presented to him for record. A fortiori a register of deeds can have
same recorded. Jaramillo said that it was not a chattel mortgage for no authority to pass upon the character of the property sought to be
the interests mortgaged did not appear to be personal property encumbered by a chattel mortgage. Of course, if the mortgaged
within the meaning of the Chattel Mortgage Law and registration property is real instead of personal the chattel mortgage would no
was refused on this ground only. doubt be held ineffective as against third parties, but this is a
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question to be determined by the courts of justice and not by the stated in the information represents only the rental for the use of
register
GR No: of deeds.
1559976 PLDT facilities, thus no personal property was stolen from PLDT.
He also maintained that business or revenue is not considered
LAUREL vs ABROGAR, et al.
JAN. 13, 2009, G.R. No. 155076 personal property and that telephone calls are privileged
communications which cannot be considered as PLDTs property.
FACTS: PLDT alleges that Baynet Co., Ltd., an alternative calling
service, conducted an alternative calling pattern known as
ISSUE: Whether or not international telephone calls and business
International Simple Resale, which is a method of routing and
are personal property.
completing international long distance calls using Internation Private
Leased lines. Because the IPL is linked to a switching equipment
RULING: No, the court ruled that international telephone calls and
which is connected to a PLDT telephone line/number, it bypasses
PLDTs business are not personal property, thus they cannot be the
the IGF at the terminating, and in some cases, the originating
subject of theft according to Article 308 of the Revised Penal Code.
country. The ISR operator is therefore able to evade payment of
For personal property, the statutory definition taking in the RPC
access and terminates bypass charges and accounting rates, thus
and movable property indicate that only movable properties which
offering international telecom services at a lower rate, damaging
have physical or material existence and susceptible of occupation
PLDT and other operators. Because of this, PLDT incurred a
by another are proper objects of theft. Intangible properties such as
monthly loss of over 10 800,000 pesos. PLDT issued a complaint
rights and ideas are not subjects of theft for the same cannot be
against Baynet for Network Fraud and the members of the Board of
taken and cannot be occupied or appropriated.
Baynet were charged with Theft by the State Prosecutor after an
Business is also not considered personal property. It is that which
inquest investigation. Laurel, one of the Board members, moved to
occupies the time, attention, and labor of men for the purpose of
quash on the ground that the allegations do not constitute theft. He
livelihood or profit, and may also mean employment, occupation, or
claimed that what was stolen was not the business of PLDT but the
profession. Although it is property, like the services in business, it is
international calls which are not personal property for they are not
not a proper subject under the RPC, for it cannot be taken or
capable of appropriation. He further claims that a caller merely uses
occupied.
PLDTs facilities through which the call is made and that the loss
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PLDT does not acquire possession and ownership of the voices of agricultural land; there is consent; the purpose is agricultural
the telephone callers or of electronic voice signals from voice calls. production; and there is consideration. In the case at bar, it was
The human voice and voice signals are intangible and not noted that the DARAB overly relied on the fact that deceased
susceptible of possession, occupation or appropriation by PLDT. Vicente C. Barretto did not join as party plaintiff the other tenants of
PLDT merely transmits electronic voice signals through facilities petitioner LUDO in CAR Cases No. 48 and No. 59 and instead was
and equipment, while Baynet merely, through its operator, impleaded as party defendant in CAR Case No. 59 along with
intercepts, reroutes the calls and passes them to its toll center. The petitioner LUDO.
instrumentality at issue is not a telephone but a telephone linked
The intention of a tenant to surrender the landholding and
with a computerized communication system with the use of Baynet
concomitantly the statutory rights emanating from the status of
cards.
being a tenant, absent a positive act, cannot, and should not, be
presumed, much less determined by implication alone. Otherwise,
LUDO & LUYM DEVELOPMENT CORP. vs. BARRETTO the right of a tenant to security of tenure becomes an illusory one.
471 SCRA 391 (2005) Tenancy relations cannot be bargained away except for the strong
reasons provided by law which must be convincingly shown by
FACTS: Vicente C. Barretto, as tenant of landowner Antonio evidence.
Bartolome. Bartolome sold the entire estate to LUDO with the latter
absorbing all the farmworkers of the former. Vicente C. Barretto There being no waiver executed by deceased tenant Barreto, no
was designated as a co-overseer with Bartolome. Ludo decided to less than the law clarifies that the existence of an agricultural
convert the entire estate into a residential-commercial complex and tenancy relationship is not terminated by mere changes of
disturbance compensation was given to some of the farmworkers; ownership, in cases of sale or transfer of legal possession as in
some who refused to accept the same were eventually settled by lease.The deceased Barreto therefore, who used to be a tenant of
compromise agreements. Ten years later, CPC ask for the renewal petitioner LUDO at the time of the conversion of the subject
of the conversion permit earlier issued to the owner. Barretto landholding, is entitled to disturbance compensation for his
fervently opposed the move. CPC informed Vicente C. Barretto of dispossession.
the termination of his employment. DARAB Regional Office found
that there was no tenancy relationship existing between LUDO and PNB vs. CA
complainant Vicente C. Barretto, thus, no disturbance G.R. No. 118357, May 6, 1997
compensation was due the latter for having been dispossessed of
the landholding he had been tilling. The ruling as reversed by the
FACTS: Marinduque Mining and Industrial Corporation (MMIC) was
appellate court.
founded by Jesus S. Cabarrus in 1949. Four years later or in 1953,
ISSUE: Whether or not there existed a tenancy relationship Cabarrus established J. Cabarrus, Inc. which subsequently was
between petitioner LUDO and Vicente C. Barretto. renamed Industrial Enterprises, Inc. (IEI). Cabarrus and his family
RULING: YES, there exists a tenancy relationship between parties owned about 12% to 14% of the shares of stock in the MMIC where
when the following essential requisites of tenancy relationship are he was the President. He was also the President of IEI.
present: the parties are the landholder and the tenant; the subject is
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On July 27, 1979, IEI entered into a coal operating contract with the to another of the whole of any property, real or personal, in
Bureau of Energy Development (BED), with Cabarrus and then possession or in action, or of any estate or right therein. It includes
Minister of Energy Geronimo Velasco as signatories. transfers of all kinds of property, and is peculiarly applicable to
intangible personal property and, accordingly, it is ordinarily
IEI filed an application for another coal operating contract on August
employed to describe the transfer of non-negotiable choses in
12, 1981. Simultaneously, IEI applied for the conversion of its July
27, 1979 coal operating contract from exploration to action and of rights in or connected with property as distinguished
development/production. IEI also followed up its application on the from the particular item or property."
three (3) newly-discovered coal blocks. All of these coal blocks
were collectively known as the Giporlos Coal Project. An assignment is a contract between the assignor and the
assignee. It generally operates by way of such contract or
Sometime in April, 1982, Minister Velasco informed Cabarrus that agreement. It is subject to the same requisites as to validity of
IEI's application for exploration of the three (3) coal blocks had contracts. However, a close scrutiny of the contract reveals that the
been disapproved and that, instead, the contract would be awarded MOA includes all tangible things found in the coal-bearing land.
to MMIC. Following Cabarrus' letter of May 4, 1982 requesting that Unquestionably, rights may be assigned as they are intangible
the rejection of IEI's application be made in writing. MMIC and IEI,
personal properties. The term "interests," on the other hand, is
through Chairman Zalamea and President Cabarrus, respectively,
entered into a Memorandum of Agreement (MOA) whereby IEI broader and more comprehensive than the word "title" and its
assigned to MMIC all its rights and interests under the July 27, 1979 definition in a narrow sense by lexicographers as any right in the
coal operating contract. nature of property less than title, indicates that the terms are not
considered synonymous. It is practically synonymous, however,
MMIC took over possession and control of the two (2) coal blocks with the word "estate" which is the totality of interest which a person
even before the MOA was finalized. However, instead of continuing has from absolute ownership down to naked possession. An
the exploration and development work actively pursued by IEI,
"interest" in land is the legal concern of a person in the thing or
MMIC completely stopped all works and dismissed the work force
thereon, leaving only a caretaker crew. property, or in the right to some of the benefits or uses from which
the property is inseparable.
ISSUE: Whether or not the chattels mortgaged to petitioner were
Since the MOA was actually a contract of sale, MMIC acquired
covered by the MOA so as to legally subject the same chattels to
ownership over the Giporlos Project when private respondent
MMIC's ownership and, eventually, to the foreclosure proceedings?
delivered it to MMIC. Under the Civil Code, unless the contract
RULING: NO. The MOA was an assignment of private respondent's contains a stipulation that ownership of the thing sold shall not pass
"rights and interests on the Coal Operating Contract described in to the purchaser until he has fully paid the price, ownership of the
the first whereas clause" thereof. In its most general and thing sold shall be transferred to the vendee upon the actual or
comprehensive sense, an assignment is "a transfer or making over constructive delivery thereof. In other words, payment of the
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purchase price is not essential to the transfer of ownership as long Court requiring "the filing with the register of deeds a copy of the
as the property sold has been delivered. Such delivery operated to orders together with a description of the property
divest the vendor of title to the property which may not be regained RULING: Sugar quotas are Immovable or Real Properties. Levy is
or recovered until and unless the contract is resolved or rescinded invalid for non-compliance with law. There is a clear positive
in accordance with law. mandate of pertinent statutes
Sugar Limitation Law - SEC. 9. The allotment corresponding to
The Giporlos Project is situated in Eastern Samar, a province each piece of land under the provisions of this Act shall be deemed
separate and distinct from Samar where the foreclosure sale took to be an improvement attaching to the land entitled
place. Hence, the foreclosure sale is null and void. Even the Chattel RA No. 1825 - SEC. 4. The production allowance or quotas
Mortgage Law (Act No. 1508) relied upon by private respondent in corresponding to each piece of land under the provisions of this Act
assailing the propriety of the public auction sale in Samar, provides shall be deemed to be an improvement attaching to the land entitled
that the said sale should be made "in the municipality where the thereto
mortgagor resides" or "where the property is situated." It has not E.O. No. 873 defines plantation:
been established that petitioner considered Catbalogan, Samar (a) The term 'plantation' means any specific area of land under sole
where the foreclosure sale was conducted, as its "residence." or undivided ownership to which is attached an allotment of
centrifugal sugar.
PRESBITERO vs FERNANDEZ,
L-19527, MARCH 30, 1963 Thus, under express provisions of law, the sugar quota allocations
are accessories to land, and cannot have independent existence
FACTS: During the lifetimes of Esperidion Presbitero, judegment away from a plantation
was rendered against him. Court also cites, Aberlardo vs. Lopez, 74 Phil. 344 "the right, title,
Sheriff levied upon and garnished sugar quotas registered under interest, participation, action (and) rent" which the grantors had or
the name of Esperidion Presbitero as the original plantation-owner might have in relation to the parcels of land sold, the sale would
furnishing copies of the writ of execution and notice of garnishment include the quotas
to the manager of the Ma-ao Sugar Central Company and the As an improvement attached to land, by express provision of law,
Sugar Quota Administration in Bacolod City, but without presenting though not physically so united, the sugar quotas are inseparable
for registration copies thereof to the Register of Deeds. therefrom, just like servitudes and other real rights over an
Issue: Are sugar quotas are real (immovable) or personal immovable
properties. Art.415 of the Civil Code in enumerating what are immovable
Importance of Issue: properties
If they be realty, then the levy upon them by the sheriff is null and 10. Contracts for public works, and servitudes and other real rights
void for lack of compliance with the procedure prescribed in Section over immovable property. (Emphasis supplied)
14, Rule 39, in relation with Section 7, Rule 59, of the Rules of
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Therefore, Sugar Quotas are deemed improvements by law and are 48 O.G. 5374
therefore immovable property.
LUNA vs ENCARNATION, et al.
LOPEZ VS OROSA, HR., ET.AL
91 Phil. 531
Feb. 28, 1958
GR L-10817-18
FACTS: A chattel mortgage was executed by Jose Luna covering
his house with mixed materials to respondent Trinidad Reyes to FACTS: Enrique Lopez is doing business under the trade name of
secure payment for a promissory note worth 1,500.00 Php with Lopez-Castelo Sawmill. Petitioner agreed with Respondent Vicente
interest of 12 percent per annum on September 25, 1948. Orosa, Jr. to supply the necessary lumber for the construction of
Luna failed to pay the promissory note, Trinidad requested the respondents theatre. Both parties also agreed that payment would
be on demand basis. Lopez delivered lumber to the Plaza Theatre
sheriff to sell the property through an extra judicial foreclosure to from May 17 to December 4, 1946. The total cost was 62,255.85,
satisfy the obligation. The certificate of sale was issued on May 24, 20,848.50 of which was paid by petitioner.
1949.
In order to pay the remaining balance of 41,771.35, respondent
Luna opposed the petition of the following grounds: promised petitioner that he would mortgage the properties of the
Plaza Theatre, to which the petitioner acceded. Unknown to the
(1) Act No. 3135 as amended by Act No. 4118 is applicable petitioner, however, the corporation of respondent had already
only to real estate mortgage mortgaged the land and building, which were not registered the
(2) The mortgage involved is chattel mortgage Torrens System at the time, of the Plaza Theatre on Nov. 1946
(3) Sale made by sheriff of the property is invalid because under Act No. 3344. Subsequently the land was registered under
the mortgage does not contain an express stipulation OCT No. O-391 on Oct 25, 1947, without any encumbrances
authorizing the extra-judicial sale of the property appearing thereon. On 17 March 1947, respondent executed an
alleged deed of assignment of his 420 of stock of the Plaza
Theater, Inc., at P100 per share. On 30 October 1952, the lower
ISSUE: Whether the sale, which was treated as a real estate Court stated the said mortgage was subject to the materialmans
mortgage, was valid since the mortgage involved was a chattel lien in favour of petitioner.
mortgage.
ISSUE: Whether a materialman's lien for the value of the materials
used in the construction of a building attaches to said structure
RULING: The validity of the sale may be maintained under the alone and does not extend to the land on which the building is
Chattel Mortgage Law, Act No. 1508. The remedy is to file an adhered to
ordinary action for recovery of possession instead of writ of
possession, under the real estate mortgage. RULING: No. Article 1923 of the Spanish Civil Code, pertinent law
LADERA VS. HODGES, CA on the matter, which reads as follows:
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highest bidder in said foreclosure proceedings. However, the bank


ART. 1923. With respect to determinate real property and secured title only on Dec. 1977.
real rights of the debtor, the following are preferred: In the meantime, in 1974, while the property was still in the alleged
xxx xxx xxx
possession of petitioner and with the alleged acquiescence of PNB,
5. Credits for refection, not entered or recorded, with respect
to the estate upon which the refection was made, and only and upon securing a permit of the Mun. Mayor, he constructed a
with respect to other credits different from those mentioned in warehouse and said property. He then leased the warehouse to one
four preceding paragraphs. Hermogenes Sibal for a period of 10 yrs. starting Jan 1975.
Later, a Deed of Sale was executed between PNB and respondent
In view of the absence of any specific provision of law to the Lacsamana over the property. The contract was amended
contrary, a building is an immovable property, irrespective of particularly to include in the sale, the building and improvement
whether or not said structure and the land on which it is adhered to thereon. By virtue of said instruments, respondent Lacsamana
belong to the same owner. A close examination of the provision of secured title over the property in her name.
the Civil Code invoked by appellant reveals that the law gives
preference to unregistered refectionary credits only with respect to On Nov. 1979, Punsalan commence suit for annulment of Deed of
the real estate upon which the refection or work was made. This Sale with Damages against PNB and Lacsamana essentially
being so, the inevitable conclusion must be that the lien so created
impugning the validity of the sale of the building as embodied in the
attaches merely to the immovable property for the construction or
repair of which the obligation was incurred. Evidently, therefore, the Amended Deed of Sale. Respondent court denied said motion to
lien in favor of appellant for the unpaid value of the lumber used in set case for pre-trial as the case was already dismissed. Hence,
the construction of the building attaches only to said structure and this petition.
to no other property of the obligors. Issue: Whether the building was real property under Article 415 (1)
of the New Civil Code which would constitute real action affecting
the real property thereto.
ANTONIO PUNSALAN, JR. V. REMEDIOS VDA. DE LACSAMA Ruling: Yes. The court held that the warehouse claimed to be
AND THE HON. JUDGE RODOLFO A. ORTIZ
121 SCRA 331 owned by petitioner is an immovable or real property as provided in
Article 415 (1) of the Civil Code. Buildings are always immovable
under the Code. A building treated separately from the land on
TOPIC: Immovable Property
which it is stood is immovable property and the mere fact that the
FACTS: Punsalan was the former registered owner of a parcel of parties to a contract seem to have dealt with it separate and apart
land consisting off 340 sq. m. situated in Bamban, Tarlac. In 1963, from the land on which it stood in no wise changed its character as
he mortgaged said land to respondent PNB (Tarlac Branch) in the immovable property.
amount of P10,000.00, but for failure to pay said amount, the
property was foreclosed on Dec. 1970. Respondent PNB was the ASSOC., INC. and SURETY CO., INC vs. IYA, ET AL.,
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L-10837-38, MAY 30, 1958 MAKATI LEASING VS WEAREVER TEXTILE MILLS


G. R. NO. L-58469 MAY 16, 1983
TUMULAD vs. VICENCIO
41 SCRA 143 FACTS: Respondent Wearever textile executed a Chattel Mortgage
over certain materials inventory and machinery described as Artos
FACTS: Alberta Vicencio and Emiliano Simeon received a loan of Aero Dryer Stentering Range in favor of petitioner Makati Leasing.
P4, 800 from Gavino and Generosa Tumalad. To guaranty said Because of respondents default, petitioner filed an extrajudicial
loan, Vicencio executed a chattel mortgage in favor of Tumalad foreclosure of the properties mortgaged, but the sheriff was not able
over their house of strong materials which stood on a land which to enter the premises to recover the machinery. Court of First
was rented from the Madrigal & Company, Inc. When Vicencio Instance ruled in favor of petitioner and issued a writ of seizure, but
defaulted in paying, the house was extrajudicially foreclosed, due to the machinery being bolted to the floor of the building, they
pursuant to their contract. It was sold to Tumalad and they instituted were only able to recover the main drive motor of the machine. The
a Civil case in the Municipal Court of Manila to have Vicencio Court of Appeals set aside the decision of the lower court and ruled
vacate the house and pay rent. that the machine is a real property enumerated under Article 415 of
the NCC since the machine was bolted to the ground for this reason
The MTC decided in favor of Tumalad ordering Vicencio to vacate the sheriff was only able to recover the main drive motor. The
the house and pay rent until they have completely vacated the classification of the property as real, according to the Court of
house. Vicencio is questioning the legality of the chattel mortgage Appeals, renders the chattel mortgage void.
on the ground that 1) the signature on it was obtained thru fraud
and 2) the mortgage is a house of strong materials which is an ISSUE: WON the property involved in the chattel mortgage is real
immovable therefore can only be the subject of a REM. On appeal, or personal.
the CFI found in favor of Tumalad, and since the Vicencio failed to
deposit the rent ordered, it issued a writ of execution, however the RULING: No the property is personal. The intention of the parties is
house was already demolished pursuant to an order of the court in controlling in this case and a perusal of the records would show that
an ejectment suit against Vicencio for non-payment of rentals. Thus the parties intended and treated the machinery as personal property
the case at bar. when they entered into the mortgage agreement. Respondent is
now estopped from challenging the nature of the machine since
ISSUE: Whether or not the chattel mortgage is void since its subject
they agreed to make the same a subject of a chattel mortgage.
is an immovable?
It must be pointed out that the characterization of the subject
RULING: NO. Although a building is by itself an immovable machinery as chattel by the private respondent is indicative of
property, parties to a contract may treat as personal property that intention and impresses upon the property the character determined
which by nature would be real property and it would be valid and by the parties. As stated in Standard Oil Co. of New York v.
good only insofar as the contracting parties are concerned. By Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract
principle of estoppel, the owner declaring his house to be a chattel may by agreement treat as personal property that which by nature
may no longer subsequently claim otherwise.
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would be real property, as long as no interest of third parties would section 3 of the Assessment Law and section 40 of the Real
be prejudiced thereby. Property Tax Code.

MERALCO SECURITIES V. CENTRAL BOARD OF Article 415[l] and [3] provides that real property may consist of
ASSESSMENT APPEALS constructions of all kinds adhered to the soil and everything
G.R. NO. L-46245 MAY 31, 1982 attached to an immovable in a fixed manner, in such a way that it
cannot be separated therefrom without breaking the material or
FACTS: Pursuant to a pipeline concession, Meralco Securities deterioration of the object.
installed from Batangas to Manila a pipeline system consisting of
cylindrical steel pipes joined together and buried not less than one The pipeline system in question is indubitably a construction
meter below the surface along the shoulder of the public highway. adhering to the soil. It is attached to the land in such a way that it
In order to repair, replace, remove or transfer segments of the cannot be separated therefrom without dismantling the steel pipes
pipeline, the pipes have to be cold-cut by means of a rotary hard- which were welded to form the pipeline. Insofar as the pipeline uses
metal pipe-cutter after digging or excavating them out of the ground valves, pumps and control devices to maintain the flow of oil, it is in
where they are buried. In points where the pipeline traversed rivers a sense machinery within the meaning of the Real Property Tax
or creeks, the pipes were laid beneath the bed thereof. Hence, the Code.
pipes are permanently attached to the land. The provincial assessor
of Laguna treated the pipeline as real property and issued tax It should be borne in mind that what are being characterized as real
declarations, containing the assessed values of portions of the property are not the steel pipes but the pipeline system as a whole.
pipeline. Meralco appealed the assessments to the defendants, but Meralco Securities has apparently two pipeline systems. A pipeline
the latter ruled that pipeline is subject to realty tax. for conveying petroleum has been regarded as real property for tax
purpose.
ISSUE: Whether the pipelines are subject to realty tax

RULING: YES. Section 2 of the Assessment Law provides that the CBAA V. MANILA ELECTRIC COMPANY
realty tax is due "on real property, including land, buildings, GR NO. L-15334, 31-JAN-1964
machinery, and other improvements" not specifically exempted in
section 3 thereof. This provision is reproduced with some FACTS: The City Assessor of Quezon City, with the view that
modification in the Real Property Tax Code which provides: Meralcos steel towers are real properties, assessed real property
SEC. 38. Incidence of Real Property Tax. There shall be levied, tax against it and ordered Meralco to pay said amount. Meralco
assessed and collected in all provinces, cities and municipalities an
paid under protest and filed a petition for review before the Court of
annual ad valorem tax on real property, such as land, buildings,
machinery and other improvements affixed or attached to real Tax Appeals, which rendered a decision in favor of Meralco. Thus,
property not hereinafter specifically exempted. * this petition for review before the Supreme Court filed by the Board
It is incontestable that the pipeline of Meralco Securities does not of Assessment Appeals, City Assessor and City Treasurer of
fall within any of the classes of exempt real property enumerated in Quezon City.
11

ISSUE: Do steel towers constitute real properties subject to real Caltex is of the position that the property is personal and thus
property tax? exempt from realty tax and is relying on a case (Davao Saw Mill Co.
RULING: No. The tax law does not provide for a definition of real vs. Castillo, 61 Phil 709) that classified machineries as personal
property when it is installed by a lessee on a leased land and
property, but Article 415 of the Civil Code does. Three paragraphs
exempted from a judgment of execution against the lessee.
under this provision are worth considering paragraphs 1, 3 and 5.
Firstly, the steel towers do not come within the objects mentioned in ISSUE: Whether or not the machines and equipment of Caltex are
paragraph 1 because they do not constitute buildings or real property?
constructions adhered to the soil. They are removable and merely RULING: Yes, the machines and equipment are real property. The
attached to a square metal frame by means of bolts. Court held that they are improvements or machineries under
Secondly, they cannot be included in paragraph 3, as they are not Section 2 of the Assessment Law and Section 3(k), (m) and Section
attached to an immovable in a fixed manner, and they can be 38 of Real Property Tax Code. Improvements on land are
separated without breaking the material or causing deterioration commonly taxed as realty even though for some purposes they
upon the object to which they are attached. They can be might be considered personalty (84 C.J.S. 181-2, Notes 40 and
disassembled by unscrewing bolts and reassembled by screwing 41).The case that Caltex relies on is not applicable in this case
the same. since the Davao Mills case is a judgment for execution on a lease
Lastly, they do not also fall under paragraph 5, for they are not while the instant case is a question on whether or not the property
machineries, receptacles, instruments or implements, and even if
is real or personal for taxation purposes. "It is a familiar
they were, they are not intended for industry works on the land.
phenomenon to see things classed as real property for purposes of
CALTEX v CBAA taxation which on general principle might be considered personal
G. R. NO. L-50466, 31 MAY 1982 property" (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630,
633).

FACTS: This case is about the realty tax on machinery and MANILA ELECTRIC COMPANY vs CBAA
equipment installed by Caltex (Philippines) Inc. in its gas stations 114 SCRA 273, May 31, 1982
located on leased land. The machines and equipment consists of
underground tanks, elevated tank, elevated water tanks, water TOPIC: IMMOVABLE PROPERTY [ Art 415(3) ]
tanks, gasoline pumps, computing pumps, water pumps, car
washer, car hoists, truck hoists, air compressors and tireflators. The PRINCIPLE: REAL PROPERTY FOR PURPOSES OF TAXATION
said machines and equipment are loaned by Caltex to gas station MAY INCLUDE THINGS GENERALLY REGARDED AS
operators under an appropriate lease agreement or receipt. The PERSONAL PROPERTY.
lessor of the land, where the gas station is located, does not
become the owner of the machines and equipment installed therein. FACTS:
Caltex retains the ownership thereof during the term of the lease.
12

Petitioner installed two storage tanks on a lot it leased from Caltex G.R. NO. L-11658, FEBRUARY 15, 1918
(Phil.) for storing fuel oil for its power plants. The tanks are made of
steel plates welded and assembled on the spot and pipelines FACTS:
installed on the sides of each tank. They are not attached to the Compaia Agricola Filipina bought a rice-cleaning
land but merely sit on concrete foundations. On assessment made machinery from the defendant machinery company, and executed a
by the Provincial Assessor in 1970, the Municipal Treasurer of chattel mortgage thereon to secure payment of the purchase price.
Bauan, Batangas required petitioner to pay realty taxes on the two It included in the mortgage deed the building of strong materials in
tanks. Payment of the realty taxes was upheld by the Batangas which the machinery was installed. The indebtedness secured by
Board of Assessment Appeals and subsequently by the Central this instrument not having been paid when it fell due, the mortgaged
Board of Assessment Appeals. A motion for reconsideration was property was sold by the sheriff,,and was bought in by the
filed with the Board but the same was denied hence, the present machinery company.
petition. Petitioner claims that said oil storage tanks do not fall At or about the time when the chattel mortgage was
within any of the kinds of real property enumerated in Article 415 of executed in favor of the machinery company, the mortgagor, the
the Civil Code. Compaia Agricola Filipina executed another mortgage to the
plaintiff upon the building to secure payment of the balance of its
ISSUE: Are the two (2) oil storage tanks considered real property indebtedness to the plaintiff under a contract for the construction of
such that they are subject to realty tax under the Real Property Tax the building. Upon the failure of the mortgagor to pay the amount of
Code? the indebtedness secured by the mortgage, the plaintiff secured
judgment for that amount, levied execution upon the building,
RULING: YES. While the two storage tanks are not embedded in bought it in at the sheriff's sale and had the sheriff's certificate of the
the land, they may, nevertheless, be considered as taxable sale duly registered.
improvements on the land, enhancing its utility and rendering it The defendant machinery company, which was in
useful to the oil industry as defined under Section 3 (k) of the Real possession, filed with the sheriff a sworn statement setting up its
Property Tax Code. It is undeniable that the two tanks have been claim of title and demanding the release of the property from the
installed with some degree of permanence as receptacles for the levy. Thereafter, upon demand of the sheriff, the plaintiff executed
considerable qualities of oil needed by Meralco for its operations. an indemnity bond in favor of the sheriff in the sum of P12,000, in
reliance upon which the sheriff sold the property at public auction to
For purposes of taxation, the term "real property" may include the plaintiff, who was the highest bidder at the sheriff's sale. This
things which generally should be regarded as personal property. It action was instituted by the plaintiff to recover possession of the
is a familiar phenomenon to see things classed as real property for building from the machinery company.
purposes of taxation which on general principle might be The trial judge, relying upon the terms of article 1473 of the
considered personal property (Standard Oil Co. of New York v. Civil Code, gave judgment in favor of the machinery company, on
Jaramillo. 44 Phil. 630, 633). the ground that the company had its title to the building registered
prior to the date of registry of the plaintiff's certificate.
LEUNG YEE VS. FRANK L. STRONG MACHINERY COMPANY
AND J. G. WILLIAMSON ISSUE: Whether the building of strong materials in which the rice-
13

cleaning machinery was installed by the Compaia Agricola Filipina FACTS: Bicerra is said to be the owner of a house, worth P200.00,
was real property or a personal property. built on a lot owned by them also. On January 1957, Teneza
forcibly demolished the said house claiming that they are the
RULING: The registry here referred to is of course the registry of owners of the same. The materials of the said house, after it was
real property, and it must be apparent that the annotation or dismantled, were placed in the custody of the barrio lieutenant and
inscription of a deed of sale of real property in a chattel mortgage as a result of Tenezas refusal to restore the house or to deliver the
registry cannot be given the legal effect of an inscription in the materials to Bicerra, the latter have suffered actual damages of
registry of real property. By its express terms, the Chattel Mortgage P200.00 plus moral and consequential damages of P600.00.
Law contemplates and makes provision for mortgages of personal Bicerra prayed that they be declared the owners the house and/or
property; and the sole purpose and object of the chattel mortgage materials that resulted in the demolition and that Teneza be ordered
registry is to provide for the registry of "Chattel mortgages," that is to pray actual damages of P200.00 plus moral and consequential
to say, mortgages of personal property executed in the manner and damages of P600.00.
form prescribed in the statute. The building of strong materials in
which the rice-cleaning machinery was installed by the Compaia ISSUE: Does a demolished house involve a title to real property
was real property, and the mere fact that the parties seem to have right?
dealt with it separate and apart from the land on which it stood in no
wise changed its character as real property. It follows that neither RULING: As a general rule, a house, even if situated on land
the original registry in the chattel mortgage of the building and the belonging to a different owner, is classified as immovable property.
machinery installed therein, not the annotation in that registry of the However, once it is demolished, its character as an immovable
sale of the mortgaged property, had any effect whatever so far as ceases. Hence, an action for recovery of damages in connection
the building was concerned. with the demolished house, does not involve title to real property,
We conclude that the ruling in favor of the machinery and falls under the jurisdiction of the justice of the peace court or
company cannot be sustained on the ground assigned by the trial the court if first instance, depending on the amount of the demand.
judge. The judgment must be sustained on the ground that the
agreed statement of facts in the court below discloses that neither PRUDENTIAL BANK V. PANIS
the purchase of the building by the plaintiff nor his inscription of the 153 SCRA 390, GR 50008, AUGUST 31, 1988
sheriff's certificate of sale in his favor was made in good faith, and
that the machinery company must be held to be the owner of the FACTS: Spouses Magcale secured a loan from Prudential
property, it appearing that the company first took possession of the Bank. To secure payment, they executed a real estate mortgage
property; and further, that the building and the land were sold to the
over a residential building. The mortgage included also the right to
machinery company long prior to the date of the sheriff's sale to the
plaintiff. occupy the lot and the information about the sales patent applied for
by the spouses for the lot to which the building stood. The spouses
BICERRA VS. TENEZA then secured another loan at the same bank for P20,000.00. To
L-16218, NOV. 29, 1962 secure payment of this additional loan, plaintiffs executed in favor of
14

the said defendant another deed of Real Estate Mortgage over the and before the government was divested of title to the land.
same properties previously mortgaged in Exhibit "A." Under the foregoing, it is evident that the mortgage executed
by private respondent on his own building was a valid mortgage.
The Secretary of Agriculture then issued a Miscellaneous Sales
Patent over the land which was later on mortgaged to the bank. As to the second mortgage, it was done after the sales patent was
issued and thus prohibits pertinent provisions of the Public Land
For failure of plaintiffs to pay their obligation to defendant Bank Act, and is therefore null and void.
after it became due, and upon application of said defendant, the
deeds of Real Estate Mortgage (Exhibits "A" and "B") were EVANGELISTA & CO. ET.AL. V. ESTRELLA ABAD SANTOS
extrajudicially foreclosed and sold in public auction despite 36 O.G. 2913 (CA)
opposition from the spouses.
FACTS:
The respondent court held that the REM was null and void. On October 9, 1954, a co-partnership with herein petitioners as
capitalist partners was formed under the name Evangelista & Co.
ISSUE: Whether or not a valid real estate mortgage can be
The Articles of Co-partnership was, however, amended on
constituted on the building erected on the land belonging to
June 7, 1955 so as to include herein respondent, Estrella Abad
another.
Santos, as an industrial partner.
RULING: Yes. A real estate mortgage can be constituted on the
building erected on the land belonging to another. Consequently, on December 17, 1963, Abad Santos filed suit
against the three (3) capitalist partners, alleging that the
The inclusion of building distinct and separate from the land partnership, which was also made a party-defendant, had been
in the Civil Code can only mean that the building itself is an paying dividends to the partners except to her. It was further alleged
immovable property. that despite her requests that she be allowed to examine
While it is true that a mortgage of land necessarily includes, in the partnership books, to give her information regarding the partnership
absence of stipulation of the improvements thereon, buildings, still a affairs and to receive her share in the dividends declared by the
building by itself may be mortgaged apart from the land on which it partnership, the petitioners refused and continued to refuse. She
has been built. Such a mortgage would be still a real estate therefore prayed that the petitioners be ordered to render an
mortgage for the building would still be considered immovable accounting of the partnership business and to pay her the
property even if dealt with separately and apart from the land. corresponding share in the dividends.

The original mortgage on the building and right to occupancy of the


land was executed before the issuance of the sales patent
15

ISSUE: Whether or not the Articles of Co-partnership shall be exclusion is premised on the ground that respondent has always
considered as a conclusive evidence of respondents status as a been a partner, an industrial partner. In addition, the Court further
held that with the consideration of Article 1767 that By a contract of
limited partner?
partnership two or more persons bind themselves, to contribute
money, property, or industry to a common fund, with the intention of
RULING: NO. The Court held that despite the genuineness of the dividing profits among themselves, the services rendered by
Articles of Co-partnership the same did not express the true intent respondent may legitimately be considered the respondents
and agreement of the parties, however, as the subsequent events contribution to the common fund.
and testimonial evidences indicate otherwise, the Court upheld that
respondent is an industrial partner of the company.
NAVARRO v. PINEDA
Article 1789 provides that An industrial partner cannot engage in 9 SCRA 631
business for himself, unless the partnership expressly permits him
to do so; and if he should do so, the capitalist partners may either
exclude him from the firm or avail themselves of the benefits which With regard to third persons who are not parties to the contract, a
house is still considered as an immovable property.
he may have obtained in violation of this provision, with a right to
damages in either case. Since 1954 and until after the FACTS: Pineda and his mother secured a loan from Navarro. In
promulgation of the decision of the appellate court, Abad Santos line with this, they executed a REM over the land owned by his
has served as a judge of the City Court of Manila and had been mother, and a Chattel Mortgage over the residential house. They
paid for services rendered allegedly contributed by her to the defaulted on the payment of the loan, but they were able to ask for
partnership. Though being a judge of the City Court of Manila an extension. However, they still defaulted, which caused Navarro
cannot be characterized a business and/or may be considered an to file for a foreclosure of the mortgages.
antagonistic business to the partnership, the petitioners,
subsequent of petitioners answer to the complaint, petitioners ISSUE: Whether or not the house should be considered as a
reached the decision that respondent be excluded from and movable or immovable property?
deprived of her alleged share in the interest or participation as an
RULING: The stipulation of the parties still govern. Thus, with
alleged industrial partner in the net profits or income of the
regard to a building erected on a lot belonging to another, this may
partnership.
be the subject matter of a chattel mortgage if the parties so
stipulate. However, with regard to third persons who are not parties
Having always known the respondent is a City Judge even before
she joined the partnership, why did it take petitioners so many years to the contract, the house is still considered as an immovable
before excluding her from said company? Furthermore, the act of property.
16

MANALANSAN VS MANALANG of said contract, the nature of the sale with the right of redemption is
GR NO. L-13646
such that ownership over the thing sold is transferred to the vendee
FACTS: Spouses Augusto Manalang and Victoria Dabu owned a 2- upon execution of the contract, subject only to resolutory condition
storey building of which they executed a deed of chattel mortgage that the vendor exercised his right of repurchase within the period
in 1951 in favor of Benito Manalansan to secure the payment of a agreed upon. From the time Manalang executed the deed of sale
loan, and after spouses failed to pay the loan on the date of with right to repurchase, he already acquired the right to consolidate
maturity, the mortgage was foreclosed and was sold to Manalansan full title over the building upon the vendors failure to redeem, as
at a public auction in 1956. Upon reaching the building, Manalansan well as the right to sell or convey this acquired right for value
found Jose Sy and Julio Cuba occupying it as tenants of Luis subject to no other condition than that the vendee could repurchase
Manalang. The latter claimed that the building as sold to him by the within the period stipulated. To use 1607 of the New Civil code
spouses in 1949 with the right to repurchase within one year, and would mean to impair his right over the Old Code.
he obtained possession of the building after the spouses failed to The court also ruled that a building is not real property. There is no
registry of buildings apart from the lands on which they stand, so
redeem the property from the period stipulated. Manalansan then
there is no legal compulsion to register, as notice to third persons,
filed a case of recovery of possession against the appellees, and transactions over or dealings on buildings that dont belong to the
lands on which they stand.
after his complaint was dismissed, he sought judgment from the
higher court. He claimed that his contract of sale with the spouses SANTOS EVANGELISTA, vs. ALTO SURETY & INSURANCE
Manalang occurred after the New Civil Code took effect, and Article CO., INC.
L-11139, APR. 23, 1958
1607 of the New Civil Code would apply.
Issue: Whether or not the building in question is real property FACTS: On June 4, 1949, petitioner herein, Santos Evangelista,
instituted Civil Case No. 8235 of the Court of First, Instance of
covered by Article 1607 of the New Civil Code. Manila entitled " Santos Evangelista vs. Ricardo Rivera," for a sum
Held: No, the New Civil Code doesnt apply. The contract between of money. On the same date, he obtained a writ of attachment,
which levied upon a house, built by Rivera on a land situated in
the spouses and Manalang was executed before the New Civil Manila and leased to him in due course. Judgment was rendered in
Code took effect, hence Article 1607 doesnt apply. Under Article favor of Evangelista, who bought the house at public auction held in
compliance with the writ of execution issued in said case.
1509 of the Old Civil Code, which was in effect during the execution When Evangelista sought to take possession of the house,
Rivera refused to surrender it, upon the ground that he had leased
17

the property from the Alto Surety & Insurance Co., Inc. and that the parties may have privately given to the property levied upon. The
latter is now the true owner of said property. It appears that a court therefore holds that the mere fact that a house was the
definite deed of sale of the same house had been issued to subject of the chattel mortgage and was considered as personal
respondent as the highest bidder at an auction sale held in which property by the parties does not make said house personal property
judgment, for the sum of money, had been rendered in favor for purposes of the notice to be given for its sale of public auction.
respondent herein, as plaintiff therein. Hence, on June 13, 1953, It is declared that the house of mixed materials levied upon
Evangelista instituted the present action against respondent and on execution, although subject of a contract of chattel mortgage
Ricardo Rivera, for the purpose of establishing his title over said between the owner and a third person, is real property within the
house, securing possession thereof, apart from recovering purview of Rule 39, section 16, of the Rules of Court as it has
damages. become a permanent fixture of the land, which, is real property.

ISSUE: Whether the house should be dealt with, for purpose of MANALANSAN VS MANALANG
attachment, as immovable property, or as personal property. GR NO. L-13646

RULING: FACTS: Spouses Augusto Manalang and Victoria Dabu owned a 2-


It is to be remembered that in the case at bar the action was
to collect a loan secured by a chattel mortgage on the house. It is storey building of which they executed a deed of chattel mortgage
also to be remembered that in practice it is the judgment creditor in 1951 in favor of Benito Manalansan to secure the payment of a
who points out to the sheriff the properties that the sheriff is to levy
upon in execution, and the judgment creditor in the case at bar is loan, and after spouses failed to pay the loan on the date of
the party in whose favor the owner of the house had conveyed it by maturity, the mortgage was foreclosed and was sold to Manalansan
way of chattel mortgage and, therefore, knew its consideration as
personal property. at a public auction in 1956. Upon reaching the building, Manalansan
These considerations notwithstanding, the rules on found Jose Sy and Julio Cuba occupying it as tenants of Luis
execution do not allow, and, we should not interpret them in such a
way as to allow, the special consideration that parties to a contract Manalang. The latter claimed that the building as sold to him by the
may have desired to impart to real estate, for example, as personal spouses in 1949 with the right to repurchase within one year, and
property, when they are, not ordinarily so. Sales on execution affect
the public and third persons. The regulation governing sales on he obtained possession of the building after the spouses failed to
execution are for public officials to follow. The form of proceedings redeem the property from the period stipulated. Manalansan then
prescribed for each kind of property is suited to its character, not to
the character, which the parties have given to it or desire to give it. filed a case of recovery of possession against the appellees, and
When the rules speak of personal property, property which is after his complaint was dismissed, he sought judgment from the
ordinarily so considered is meant; and when real property is spoken
of, it means property which is generally known as real property. The higher court. He claimed that his contract of sale with the spouses
regulations were never intended to suit the consideration that
18

Manalang occurred after the New Civil Code took effect, and Article transactions over or dealings on buildings that dont belong to the
lands on which they stand.
1607 of the New Civil Code would apply.
TOLEDO-BANAGA V CA
ISSUE: Whether or not the building in question is real property GR NO. 127941, JANUARY 28, 1989
covered by Article 1607 of the New Civil Code.
FACTS: Petitioner Banaga filed an action for redemption of her
RULING: No, the New Civil Code doesnt apply. The contract property which was earlier foreclosed and later sold in a public
auction to the respondent. The trial court declared petitioner to have
between the spouses and Manalang was executed before the New
lost her right for redemption and ordered that certificate of title be
Civil Code took effect, hence Article 1607 doesnt apply. Under issued to the respondent which the petitioner caused an annotation
Article 1509 of the Old Civil Code, which was in effect during the of notice of lis pendens to the title. On appeal, the CA reversed the
decision and allowed the petitioner to redeem her property within a
execution of said contract, the nature of the sale with the right of
certain period. Banaga tried to redeem the property by depositing to
redemption is such that ownership over the thing sold is transferred the trial court the amount of redemption that was financed by her
to the vendee upon execution of the contract, subject only to co-petitioner Tan. Respondent opposed in that she made the
redemption beyond the period ordered by the court. The lower court
resolutory condition that the vendor exercised his right of
however upheld the redemption and ordered the Register of Deeds
repurchase within the period agreed upon. From the time Manalang to cancel the respondents title and issue a new title in favor of the
executed the deed of sale with right to repurchase, he already petitioner. In a petition for certiorari before the CA by the
acquired the right to consolidate full title over the building upon the respondent, another notice of lis pendens was annotated to the title.
CA issued a temporary restraining order to enjoin the execution of
vendors failure to redeem, as well as the right to sell or convey this
the court order. Meanwhile, Banaga sold the property to Tan in the
acquired right for value subject to no other condition than that the absolute deed of sale that mentions the title of the property still in
vendee could repurchase within the period stipulated. To use 1607 the name of the respondent which was not yet cancelled. Despite
the lis pendens on the title, Tan subdivided the lot into a subdivision
of the New Civil code would mean to impair his right over the Old
plan which she made not in her own name but that of the
Code. respondent. Tan then asked the Register of Deeds to issue a new
title in her name. New titles were issued in Tans name but carried
The court also ruled that a building is not real property. There is no the annotation of the two notices of lis pendens. Upon learning the
registry of buildings apart from the lands on which they stand, so new title of Tan the respondent impleaded her in his petition. The
there is no legal compulsion to register, as notice to third persons,
CA later sets aside the trial courts decision and declared the
19

respondent as the absolute owner of the property for failure of the thereof so as to guard or protect her interest. She has only to look
petitioner to redeem the property within the period ordered by the and rely on the entries in the Certificate of Title. By looking at the
court. The decision was final and executory and ordered the title Tan would know that the certificate is in the name of
Register of Deeds to reinstate the title in the name of the respondent. Being a buyer in bad faith, Tan does not acquire any
respondent. The Register of Deeds refused alleging that Tans better right over the property. The adjudication of the ownership in
certificate must be surrendered first. The respondent cited the favor to the respondent includes the delivery of the possession by
register of deeds in contempt but the court denied contending that the defeated party to the respondent.
the remedy should be consultation with the Land Registration
Commissioner and in its other order denied the motion of
respondent for writ of possession holding that the remedy would be LAVARRO V LABITORIA
G.R. no. L-32030, July 2, 1930
to a separate action to declare Tans title as void. In its motion for
certiorari and mandamus to the CA, the court set aside the two
assailed orders of the trial court and declared the title of Tan as null FACTS: Anastacio Labitoria,the original owner of a tract of land
and void and ordered the Register of Deeds to reinstate the title in divided into three parcels situated in the province of Tayabas. He
the name of the respondent. Petitioners now argued that Tan is a left four children, Francisco, Liberata, Tirso, and Eustacio Labitoria.
buyer in good faith and raised the issue on ownership of the lot. Francisco acquired the shares of Tirso and Eustacio together with
the greater part of that of Liberata, and thus became the owner of
ISSUE: Whether or not petitioner Tan is a buyer in good faith?
nearly all of the land. After his death, his children, Macario and
RULING: The court held that Tan is not a buyer in good faith Regina Labitoria, became the owners of his interest in the land.
because when the property was sold to her she was aware of the
Sofia Lavarro is the daughter of Liberata Labitoria, and in or about
interest of the respondent over the property. She even furnished the
the year 1897, her first husband, Crispulo Alcantara, borrowed
amount used by Banaga to redeem the property. When she bought
P330 from Francisco Labitoria on the condition that Alcantara
the property from Banaga she knows that at that time the property
should plant 3,300 coconut palms on the land to be divided in equal
was not registered to the sellers name. The deed of sale mentioned
shares between the parties. Under this agreement, about 1,700
the title which was named to the respondent. Moreover the title still
palms were planted by Alcantara, but later on, further plantings
carries 2 notices of lis pendens. Tan therefore cannot feign
were made by his wife, Sofia Lavarro.
ignorance on the status of the property when she bought it.
Because Tan was also impleaded as a party to the litigation, she is In July, 1916, the land was registered in the names of Macario
bound by the decision promulgated to the subject of such litigation. Labitoria, Regina Labitoria, Bernardo Labitoria, Vidal Labitoria,
It is a settled rule that the party dealing with a registered land need Ariston Lavarro, Sofia Lavarro, and Isidro Lavaris. Nothing seems to
not go beyond the Certificate of Title to determine the true owner have been said about the improvements on the land and no special
20

mention of them appears in the certificate of title. Neither were the


respective shares of the persons to whom the land was adjudicated
definitely determined.

ISSUE: WON the plaintiffs has better claim over the ownership of
the improvements of the land

RULING: It is sufficient to say that if they had any claim to the


property or improvements, such claims should have been presented
in the registration proceedings in 1916; trees and plants annexed to
the land are parts thereof and unless rights or interests in such
trees or plants are claimed in the registration proceedings by
others, they become the property of the persons to whom the land
is adjudicated. The plaintiffs did not prosecute their alleged rights
until eleven years after the registration of the property, and it is
obvious that whatever rights they may have had are now lost by
prescription.

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