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SIBAL vs VALDEZ
FACTS:
 VitalianoMamawal, Deputy sheriff of the Province of Tarlac, by virtue of a writ of
execution issued by the CFI of Pampanga, attached several properties of Leon Sibal
including a sugar cane planted by the latter on seven parcels of land. Mamawal then sold
the aforementioned properties at a public auction to Emiliano Valdez.
 Within one year from the date of attachment and sale, Sibal offered to redeem the sugar
cane and tendered to Valdez the amount sufficient to cover the price paid by the latter,
the interest thereon and any assessments or taxes which he may have paid thereon after
the purchase, and the interest corresponding thereto. Valdez however, refused to accept
the money and to return the sugar cane on the ground that the sugar cane in question had
the nature of personal property and was not, hence, subject to redemption1.
 Sibal prayed in court that a writ of preliminary injunction be issued against Valdez (1)
from distributing the lands; (2) from taking possession of, or harvesting the sugar cane;
and (3) from taking possession, or harvesting the palay in said parcels of land. Plaintiff
also prayed that a judgment be rendered in his favor and against the defendants ordering
them to consent to the redemption of the sugar cane.
 Lower court issued the preliminary injunction prayed for. By way of counterclaim
Valdez, alleged that because of the preliminary injunction he was unable to gather the
sugar cane, sugar-cane shoots and palay in said parcels of land, representing loss and
damages to him.
 LC rendered a judgment against the plaintiff and in favor of the defendants, holding that
the sugar cane in question was a personal property and, as such, was not subject to
redemption. Plaintiff appealed.

ISSUE: WON the sugar cane is classified as a personal property.

HELD:
 For the purpose of attachment and execution, and for the purposes of the Chattel
Mortgage Law, "ungathered products" have the nature of personal property.
 Generally, sugar cane falls under the classification of “ungathered products” mentioned
in par.3 of Art. 334 of the CC: “Trees, plants, and ungathered products, while they are
annexed to the land or form an integral part of any immovable property." However, this
article has received in recent years an interpretation by the Tribunal Supremo de España,
which holds that, under certain conditions, growing crops may be considered as personal
property.
 In some cases "standing crops" may be considered and dealt with as personal property. In
the case of Lumber Co. vs. Sheriff and Tax Collector (106 La., 418) the Supreme Court
said: "True, by article 465 of the Civil Code it is provided that 'standing crops and the
fruits of trees not gathered and trees before they are cut down . . . are considered as part
of the land to which they are attached, but the immovability provided for is only one in
abstracto and without reference to rights on or to the crop acquired by others than
the owners of the property to which the crop is attached. . . . The existence of a right
on the growing crop is a mobilization by anticipation, a gathering as it were in
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advance, rendering the crop movable quoad the right acquired therein. Our
jurisprudence recognizes the possible mobilization of the growing crop."
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TSAI vs. CA

Facts:
 1975, Evertex obtained 3M loan from PBCom secured by REM (lot where its factory
stands) and Chattel mortgage (listed on Annex A of motgage)
 1979, Evertex obtained a 2nd loan of 3,356,000.00 secured by the same chattels listed on
Annex A of the 1st mortgage
 Evertex was declared insolvent in a proceeding and all the assets of the company were
taken into the custody of the Insolvency Court, including those mortgaged under the 2
mortgages with PBCom
 PBCom on the other hand commenced a EJF proceeding because of Evertex's default in
the payment of its obligations.
 PBCom upon consolidation of its ownership over the properties, leased the property to
Ruby Tsai for 50k a month & the properties were sold to Tsai for 9M
 Evertex filed a case for annulment of sale & conveyance with damages against PBCom
with Tsai saying that the sale was in violation of the Insolvency Law and that the
properties conveyed to Tsai were not included in the 2 mortgages and were not even
included in the Notice of Sheriff's Sale & COS
 RTC ruled that the foreclosure of the subject properties were irregular and illegal as they
were not included in the Notice of Sale and COS, decision affirmed by CA except for
award of damages

Issue: Whether or not the inclusion of the questioned properties in the foreclosed properties is
proper and whether or not the sale of these properties to petitioner Ruby Tsai is valid

HELD: the inclusion of the questioned properties in the foreclosure is improper because they
were acquired in 1981 and not involve in the 1985 & 1979 mortgages. Sale to Tsai is invalid as
she is not a purchaser in good faith.
 both the trial and the appellate courts reached the same finding that the true intention of
PBCOM and the owner, EVERTEX, is to treat machinery and equipment as chattels.
assuming arguendo that the properties in question are immovable by nature, nothing
detracts the parties from treating it as chattels to secure an obligation under the principle
of estoppel.
 an immovable may be considered a personal property if there is a stipulation as when it is
used as security in the payment of an obligation where a chattel mortgage is executed
over it (Navarro v. Pineda)
 since the disputed machineries were acquired in 1981 and could not have been involved
in the 1975 or 1979 chattel mortgages, it was consequently an error on the part of the
Sheriff to include subject machineries with the properties enumerated in said chattel
mortgages.
 As the auction sale of the subject properties to PBCom is void, no valid title passed in its
favor. Consequently, the sale thereof to Tsai is also a nullity under the elementary
principle of nemo dat quod non habet.
 Tsai cannot be considered a purchaser in good faith as she failed to substantially prove
her claim Moreover, a purchaser in good faith and for value is one who buys the property
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of another without notice that some other person has a right to or interest in such property
and pays a full and fair price for the same, at the time of purchase, or before he has notice
of the claims or interest of some other person in the property.
 Records reveal, however, that when Tsai purchased the controverted properties, she knew
of respondent's claim thereon.
 the mere fact that the lot where the factory and the disputed properties stand is in
PBCom's name does not automatically make PBCom the owner of everything found
therein, especially in view of EVERTEX's letter to Tsai enunciating its claim.
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Davao Sawmill Co. v. Castillo

Facts:
 Davao Saw Mill Co., Inc., a holder of a lumber concession, has operated sawmill in a
land which it does not own. The company erected a building therein which housed the
machinery used by it.
 In the lease contract between the sawmill company and the owner of the land, it has been
agreed that after the lease period or in case the company should leave or abandon the land
leased before the said period, ownership of all the improvements and buildings except
machineries and accessories, made by the company shall pass to the owner of the land
without any obligation on its part to pay any amount for said improvements and
buildings.
 In another action brought by Davao Light and Power Co., A writ of execution was issued
against the company and the properties in question were levied upon.
 The company assailed the said writ contending that the machineries and accessories were
personal in nature, hence, not subject to writ of execution. The trial judge ruled in favour
of the company.

Issue: Whether or not the subject properties are personal in nature.

Held:
 The subject properties are personal in nature.
 Article 334, paragraph 5, of the [Old] Civil Code provides that real property consists of
(5) 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 of
industry.
 Machinery which is movable in nature only becomes immovable when placed in a land
by the owner of the property or land but not when so placed by a tenant or any person
having only a temporary right, unless such person acted as the agent of the owner. In the
case at bar, the machinery is intended not by the owner of the land but by the saw mill
company for use in connection with its trade. In this sense, the machinery is not a real
property.
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Burgos v. Chief of Staff - 133 SCRA 800

FACTS:
 Two warrants were issued against petitioners for the search on the premises of
“Metropolitan Mail” and “We Forum” newspapers and the seizure of items alleged to
have been used in subversive activities. The items include printing equipment, motor
vehicles, documents and books all possessed by Burgos Jr.
 Petitioners prayed that a writ of preliminary mandatory and prohibitory injunction be
issued for the return of the seized articles, and that respondents be enjoined from using
the articles thus seized as evidence against petitioner.
 Petitioners questioned the warrants for the lack of probable cause and that the two
warrants issued indicated only one and the same address. In addition, the items seized
subject to the warrant were real properties.

ISSUE: W/N the seized items are personal properties.

HELD: YES.
 As to the issue that the  items seized were real properties, the court applied the principle
in the case of Davao Sawmill Co. v. Castillo, ruling “that machinery which is movable by
nature becomes immobilized when placed by the owner of the tenement, property or
plant, but not so when placed by a tenant, usufructuary, or any other person having only a
temporary right, unless such person acted as the agent of the owner.” In the case at bar,
petitioners did not claim to be the owners of the land and/or building on which the
machineries were placed. This being the case, the machineries in question, while in fact
bolted to the ground remain movable property susceptible to seizure under a search
warrant.
 The above rule does not require that the property to be seized should be owned by the
person against whom the search warrant is directed. It may or may not be owned by him.
Ownership, therefore, is of no consequence, and it is sufficient that the person against
whom the warrant is directed has control or possession of the property sought to be
seized, as petitioner Jose Burgos, Jr. was alleged to have in relation to the articles and
property seized under the warrants.
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PEOPLE'S BANK AND TRUST CO. vs. DAHICAN LUMBER COMPANY

G.R. No. L-17500 May 16, 1967

Facts:

 On September 8, 1948, Atlantic Gulf & Pacific Company of Manila, a West Virginia
corporation licensed to do business in the Philippines sold and assigned all its rights in
the Dahican Lumber concession to Dahican Lumber Company - hereinafter referred to as
DALCO - for the total sum of $500,000.00, of which only the amount of $50,000.00 was
paid. Thereafter, to develop the concession, DALCO obtained various loans from the
People's Bank & Trust Company amounting, as of July 13, 1950, to P200,000.00. In
addition, DALCO obtained, through the BANK, a loan of $250,000.00 from the Export-
Import Bank of Washington D.C., evidenced by five promissory notes of $50,000.00
each, maturing on different dates, executed by both DALCO and the Dahican America
Lumber Corporation, a foreign corporation and a stockholder of DALCO,
 As security for the payment of the abovementioned loans, on July 13, 1950 DALCO
executed in favor of the BANK a deed of mortgage covering five parcels of land situated
in the province of Camarines Norte together with all the buildings and other
improvements existing thereon and all the personal properties of the mortgagor located in
its place of business in the municipalities of Mambulao and Capalonga, Camarines Norte.
On the same date, DALCO executed a second mortgage on the same properties in favor
of ATLANTIC to secure payment of the unpaid balance of the sale price of the lumber
concession amounting to the sum of $450,000.00. Both deeds contained a provision
extending the mortgage lien to properties to be subsequently acquired by the mortgagor.
 Both mortgages were registered in the Office of the Register of Deeds of Camarines
Norte. In addition thereto DALCO and DAMCO pledged to the BANK 7,296 shares of
stock of DALCO and 9,286 shares of DAMCO to secure the same obligation.
 Upon DALCO's and DAMCO's failure to pay the fifth promissory note upon its maturity,
the BANK paid the same to the Export-Import Bank of Washington D.C., and the latter
assigned to the former its credit and the first mortgage securing it. Subsequently, the
BANK gave DALCO and DAMCO up to April 1, 1953 to pay the overdue promissory
note.
 After July 13, 1950 - the date of execution of the mortgages mentioned above - DALCO
purchased various machineries, equipment, spare parts and supplies in addition to, or in
replacement of some of those already owned and used by it on the date aforesaid.
Pursuant to the provision of the mortgage deeds quoted theretofore regarding "after
acquired properties," the BANK requested DALCO to submit complete lists of said
properties but the latter failed to do so. In connection with these purchases, there
appeared in the books of DALCO as due to Connell Bros. Company (Philippines) - a
domestic corporation who was acting as the general purchasing agent of DALCO -the
sum of P452,860.55 and to DAMCO, the sum of P2,151,678.34.
 On December 16, 1952, the Board of Directors of DALCO, in a special meeting called
for the purpose, passed a resolution agreeing to rescind the alleged sales of equipment,
spare parts and supplies by CONNELL and DAMCO to it.
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 On January 13, 1953, the BANK, in its own behalf and that of ATLANTIC, demanded
that said agreements be cancelled but CONNELL and DAMCO refused to do so. As a
result, on February 12, 1953; ATLANTIC and the BANK, commenced foreclosure
proceedings in the Court of First Instance of Camarines Norte against DALCO and
DAMCO.
 Upon motion of the parties the Court, on September 30, 1953, issued an order
transferring the venue of the action to the Court of First Instance of Manila.
 On August 30, 1958, upon motion of all the parties, the Court ordered the sale of all the
machineries, equipment and supplies of DALCO, and the same were subsequently sold
for a total consideration of P175,000.00 which was deposited in court pending final
determination of the action. By a similar agreement one-half (P87,500.00) of this amount
was considered as representing the proceeds obtained from the sale of the "undebated
properties" (those not claimed by DAMCO and CONNELL), and the other half as
representing those obtained from the sale of the "after acquired properties".

ISSUE: WON the "after acquired properties" were subject to the deeds of mortgage mentioned
heretofore. Assuming that they are subject thereto,
WON the mortgages are valid and binding on the properties aforesaid inspite of the fact that they
were not registered in accordance with the provisions of the Chattel Mortgage Law.

HELD:
 Under the fourth paragraph of both deeds of mortgage, it is crystal clear that all property
of every nature and description taken in exchange or replacement, as well as all buildings,
machineries, fixtures, tools, equipment, and other property that the mortgagor may
acquire, construct, install, attach; or use in, to upon, or in connection with the premises -
that is, its lumber concession - "shall immediately be and become subject to the lien" of
both mortgages in the same manner and to the same extent as if already included therein
at the time of their execution. Such stipulation is neither unlawful nor immoral, its
obvious purpose being to maintain, to the extent allowed by circumstances, the original
value of the properties given as security.
 Article 415 does not define real property but enumerates what are considered as such,
among them being machinery, receptacles, instruments or replacements intended by
owner of the tenement for an industry or works which may be carried on in a building or
on a piece of land, and shall tend directly to meet the needs of the said industry or works.
On the strength of the above-quoted legal provisions, the lower court held that inasmuch
as "the chattels were placed in the real properties mortgaged to plaintiffs, they came
within the operation of Art. 415, paragraph 5 and Art. 2127 of the New Civil Code". In
the present case, the characterization of the "after acquired properties" as real property
was made not only by one but by both interested parties. There is, therefore, more reason
to hold that such consensus impresses upon the properties the character determined by the
parties who must now be held in estoppel to question it.
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Berkenkotter vs Cu Unjieng 61 Phil 663

Facts:
 On 26 April 1926, the Mabalacat Sugar Company obtained from Cu Unjieng e Hijos, a
loan secured by a first mortgage constituted on 2 parcels of land "with all its buildings,
improvements, sugarcane mill, steel railway, telephone line, apparatus, utensils and
whatever forms part or is a necessary complement of said sugar-cane mill, steel railway,
telephone line, now existing or that may in the future exist in said lots.”
 On 5 October 1926, the Mabalacat Sugar Company 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. Green proposed to the 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, Cu
Unjieng e Hijos, and that in case Green should fail to obtain an additional loan from Cu
Unjieng e Hijos, said machinery and equipment would become security therefore, said
Green binding himself not to mortgage nor encumber them to anybody until Berkenkotter
be fully reimbursed for the corporation's indebtedness to him.
 Having agreed to said proposition made in a letter dated 5 October 1926, Berkenkotter,
on 9 October 1926, delivered the sum of P1,710 to Green, the total amount supplied by
him to Green having been P25,750. Furthermore, 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. On 10 June 1927, Green applied to Cu Unjieng e Hijos for an additional loan
of P75,000 offering as security the additional machinery and equipment acquired by said
Green and installed in the sugar central after the execution of the original mortgage deed,
on 27 April 1927, together with whatever additional equipment acquired with said loan.
Green failed to obtain said loan. Hence, above mentioned mortgage was in effect.

Issue: Whether or not the additional machinery and equipment is considered an improvement
subject to the mortgage executed in favor of Mabalacat Sugar Co., Inc. by Cu Unjieng e Hijos.

Held: Yes.
 The installation of the machinery and equipment in question in the central converted
them into real property by reason of their purpose. 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 necessarily be permanent.
 Case Cited: Bischoff vs. Pomar and Compania General de Tabacos (cited with approval
in the case of Cea vs. Villanueva) (1) in a mortgage of real estate, the improvements on
the same are included; therefore, all objects permanently attached to a mortgaged
building or land, although they may have been placed there after the mortgage was
constituted, are also included. (2) when it was stated in the mortgage that the
improvements, buildings, and machinery that existed thereon were also comprehended, it
is indispensable that the exclusion thereof be stipulated between the contracting parties.
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Pastor D. Ago vs CA, Hon. Montaño Ortiz, The Provincial Sheriff of Surigao, and Grace Park
Engineering, Inc. GR 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 installment 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 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.

ISSUE: 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:
 The subject sawmill machineries and equipment became real estate properties in
accordance with the provision of Art. 415 (5) of the NCC: ART. 415 – The following are
immovable property: xxxx (5) Machinery, receptacles, instruments or implements
intended by the owner of the tenement for an industry or works which may be carried on
in a building or on a piece of land, and which tend directly to meet the needs of the said
industry or works;
 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.
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GOVERNMENT SERVICE INSURANCE SYSTEM, plaintiff-appellee, vs. CALSONS,

INC., CESARIO P. CALANOC, and NENITA GODINEZ, defendants-appellants.
G.R. No. L-19867 | 1968-05-29

FACTS:
 On April 11, 1957 appellant CALSONS, INC. applied for a loan of P2,000,000.00 to
appellee to pay the balance of the purchase price of certain parcels of land situated at the
corner of Globo de Oro and Elizondo Streets, Quiapo, Manila, and to finance the
construction of a two-storey textile market building on said land. The application was
approved by appellee's Board of Trustees on August 26, 1957. In connection with said
loan appellants executed on October 31, 1957 a promissory note.
 To secure payment of the note "and/or the interest thereon and/or other obligations
arising thereunder", appellants executed on the same date a first mortgage in favor of
appellee on five (5) parcels of land particularly described in the mortgage contract,
"together with all the buildings and improvements now existing thereon or which may
hereafter be constructed on the mortgaged property (ies) of which MORTGAGOR is the
absolute owner, free from all liens and encumbrances."
 In accordance with the agreement between the parties, the old building standing on the
mortgaged properties was insured for P300,000.00 on December 1, 1959. Appellee
advanced the sum of P5,628,00 for the annual premium, but appellants failed to
reimburse the same. 
 Appellee filed a complaint for the foreclosure of the mortgage with the Court of First
Instance of Manila on the ground that without the prior written consent of plaintiff
defendants removed and disposed of the complete band sawmill and filing machine
which formed part of the properties mortgaged.
 CFI – in favor of plaintiff. Hence, this petition.
 The appellant contend that the said machineries were not included in the mortgage.

ISSUE: W/N the machineries are immovable properties.

HELD: YES.
 The mortgage was on the lands "together with all the buildings and improvements now
existing or which may hereafter be constructed" thereon. And the machineries, as found
by the trial court, were permanently attached to the property, and installed there by the
former owner to meet the needs of certain works or industry therein. They were therefore
part of immovable pursuant to Article 415 of the Civil Code and need not be the subject
of a separate chattel mortgage in order to be deemed duly encumbered in favor of
appellee. 
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MINDANAO BUS COMPANY, petitioner, vs. THE CITY ASSESSOR & TREASURER
and the BOARD OF TAX APPEALS of Cagayan de Oro City, respondents.

FACTS:
 Petitioner Mindanao Bus Company is a public utility company engaged in the transport
of passengers and cargoes by motor trucks in Mindanao with main offices in CDO. It is
the owner of the land where it maintains and operates a garage for its TPU motor trucks,
and the machineries which are placed therein are used for the construction and repair of
the same.
 The said machineries are placed in wooden and cement platforms and have never been or
were never used as industrial equipment to produce finished products for sale, nor to
repair machineries, parts and the like offered to the general public indiscriminately for
business or commercial purposes.
 Respondent City Assessor assessed the machineries at P4,400. Mindanao Bus appealed
the assessment to the Board of Tax Appeals on the ground that the same are not realty.
 The Court of Tax Appeals sustained the City Assessor's ruling, and Mindanao Bus
brought the case to the Supreme Court alleging that the questioned assessments are not
valid, and that the said tools, equipment or machineries are not immovable taxable real
properties.

ISSUE: Whether or not the said equipment or machineries are immobilized by destination in
accordance with paragraph 5 of Article 415 of the New Civil Code.

HELD: No.
 Movable equipment to be immobilized in contemplation of the law 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.
 The tools and equipment 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. 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.
 Aside from the element of essentiality the above-quoted provision also requires that the
industry or works be carried on in a building or on a piece of land. However, the
equipment in question are destined only to repair or service the transportation business,
which is not carried on in a building or permanently on a piece of land, as demanded by
the law. Said equipment may not, therefore, be deemed real property.
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MAKATI LEASING & FINANCE CORP. VS WEAREVER TEXTILE MILLS

Facts:
 Wearever obtained financial accommodations from MLFC secured by chattel mortgage
of some raw materials inventory and a machinery.
 Upon default of payment, MFLC commenced an EJF of the property but subsequently
applied for judicial foreclosure
 RTC issued the writ of seizure
 CA reversed the RTC decision & ordered the return of the machine 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 enforce the writ was to take the main drive motor of said
machinery.

Issue: Whether the machinery in suit is real or personal property from the point of view of the
parties

HELD: Personal property.

 The intent of the parties gave the machinery in question the character of a personal
property
 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.
 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.
 On estoppel: As aptly pointed out by petitioner and not denied by the respondent, the
status of the subject machinery as movable or immovable was never placed in issue
before the lower court and the Court of Appeals except in a supplemental memorandum
in support of the petition filed in the appellate court. Moreover, even granting that the
charge is true, such fact alone does not render a contract void ab initio, but can only be a
ground for rendering said contract voidable, or annullable pursuant to Article 1390 of the
new Civil Code, by a proper action in court.
 The error of the appellate court in ruling that the questioned machinery is real, not
personal property, becomes very apparent.
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Manila Electric vs. The City Assessor (2015)

G.R. No. 166102 | 2015-08-05

Facts:
 MERALCO is a private corporation authorized to operate as a public utility engaged in
electric distribution. MERALCO has been successively granted franchises to operate in
Lucena City beginning 1922 until the present time.
 In 1989, MERALCO received from the City Assessor of Lucena a copy of Tax
Declaration No. 019-6500 covering the electric facilities, classified as capital investment,
of the company: (a) transformer and electric post; (b) transmission line;
(c) insulator; and (d) electric meter. Under the Tax Declaration, these electric facilities
had a market value of P81,811,000 and an assessed value of P65,448,800, and were
subjected to real property tax as of 1985.
 MERALCO appealed the Tax Declaration before the Local Board of Assessment Appeals
(LBAA) of Lucena City. The LBAA, in affirming the exemption of Meralco, cited a 1964
MERALCO case which found that the steel towers fell within the term "poles" expressly
exempted from taxes under the franchise of MERALCO. The steel towers were personal
properties under the provisions of the Civil Code and, hence, not subject to real property
tax. Thus, the LBAA found that MERALCO was exempted from payment of real
property tax on said substation facilities. The LBAA also ruled that under its franchise,
MERALCO was required to pay the City Government of Lucena a tax equal to 5% of its
gross earnings, in lieu of any and all taxes.
 The City Assessor of Lucena filed an appeal with the Central Board of Assessment
Appeals (CBAA) which affirmed the assailed LBAA judgment (LBAA-89-2). The City
Assessor no longer appealed said CBAA Decision and it became final and executory in
1991.
 Six years later, in 1997, MERALCO received a letter from the City Treasurer of Lucena,
which stated that the company was being assessed real property tax delinquency on its
machineries beginning 1990.
 MERALCO appealed Tax Declaration Nos. 019-6500 and 019-7394 before the LBAA of
Lucena City and posted a surety bond to guarantee payment of its real property tax
delinquency.
 The LBAA declared that Sections 234 and 534(f) of the Local Government Code (LGC)
repealed the provisions in the franchise of MERALCO and Presidential Decree No. 551
pertaining to the exemption of MERALCO from payment of real property tax on its
poles, wires, insulators, transformers, and meters.
 The LBAA refused to apply as res judicata its earlier judgment in LBAA-89-2, as
affirmed by the CBAA, because it involved collection of taxes from 1985 to 1989, while
the present case concerned the collection of taxes from 1989 to 1997.
 The CBAA agreed with the LBAA that MERALCO could no longer claim exemption
from real property tax on its machineries with the enactment of Republic Act No. 7160,
otherwise known as the Local Government Code of 1991. Yet, the CBAA modified the
ruling of the LBAA by excluding from the real property tax deficiency assessment the
years 1990 to 1991.
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 MERALCO sought recourse from the Court of Appeals (CA) by filing a Petition for
Review under Rule 43. The CA sustained the tax liability of MERALCO and held that
the withdrawal of its exemption did not violate the non-impairment clause of the
Constitution. Hence, MERALCO filed the present Petition for Review on Certiorari.

HELD:
 The transformers, electric posts, transmission lines, insulators, and electric meters of
MERALCO are no longer exempted from real property tax and may qualify as
"machinery" subject to real property tax under the Local Government Code.
 In the 1964 MERALCO case, given the express exemption from taxes and assessments of
the "poles, wires, transformers, and insulators" of MERALCO under Ordinance No. 44
(issued in 1903), the sole issue was whether or not the steel towers of MERALCO
qualified as "poles" which were exempted from real property tax. Similarly, under the 20-
year franchise granted in 1972 to MERALCO by the Municipal Board of Lucena City
through Resolution No. 2679, the transformers, electric posts, transmission lines,
insulators, and electric meters of MERALCO were expressly made exempt from real
property tax.
 Just when the franchise of MERALCO in Lucena City was about to expire, the Local
Government Code took effect on January 1, 1992, Sections 193 and 234 of which
provide: Except as provided herein, any exemption from payment of real property tax
previously granted to, or presently enjoyed by, all persons, whether natural or juridical,
including all government-owned or controlled corporations are hereby withdrawn upon
the effectivity of this Code.
 Taking into account the above-mentioned provisions, the evident intent of the Local
Government Code is to withdraw/repeal all exemptions from local taxes, unless otherwise
provided by the Code. The limited and restrictive nature of the tax exemption privileges
under the Local Government Code is consistent with the State policy to ensure autonomy
of local governments and the objective of the Local Government Code to grant genuine
and meaningful autonomy to enable local government units to attain their fullest
development as self-reliant communities and make them effective partners in the
attainment of national goals. The obvious intention of the law is to broaden the tax base
of local government units to assure them of substantial sources of revenue.
 MERALCO, a private corporation engaged in electric distribution, and its transformers,
electric posts, transmission lines, insulators, and electric meters used commercially do not
qualify under any of the ownership, character, and usage exemptions enumerated in
Section 234 of the Local Government Code. It is a basic precept of statutory construction
that the express mention of one person, thing, act, or consequence excludes all others as
expressed in the familiar maxim expressio unius est exclusio alterius. Not being among
the recognized exemptions from real property tax in Section 234 of the Local
Government Code, then the exemption of the transformers, electric posts, transmission
lines, insulators, and electric meters of MERALCO from real property tax granted under
its franchise was among the exemptions withdrawn upon the effectivity of the Local
Government Code on January 1, 1998.
 Under Section 199(0) of the Local Government Code, machinery, to be deemed real
property subject to real property tax, need no longer be annexed to the land or building as
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these "may or may not be attached, permanently or temporarily to the real property," and
in fact, such machinery may even be "mobile."The 1964 MERALCO case was decided
when The Assessment Law was still in effect and Section 3(f) of said law still required
that the machinery be attached to the real property.
 The conclusions of the Court in the 1964 MERALCO case do not hold true anymore
under the Local Government Code. The reference in said case to the Civil Code
definition of real property was only an alternative argument since the tax law at the time
does not provide for a definition of real property.
 While the Local Government Code still does not provide for a specific definition of "real
property," Sections 199(0) and 232 of the LGC, respectively, gives an extensive
definition of what constitutes "machinery" and unequivocally subjects such machinery to
real property tax.
 The Court has acknowledged that 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. (see Caltex (Philippines), Inc. vs. CBAA) Therefore, for
determining whether machinery is real property subject to real property tax, the definition
and requirements under the Local Government Code are controlling.
 As between the Civil Code, a general law governing property and property relations, and
the Local Government Code, a special law granting local government units the power to
impose real property tax, then the latter shall prevail.
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INVOLUNTARY INSOLVENCY OF PAUL STROCHECKER, appellee, vs. ILDEFONSO

RAMIREZ, creditor-appellant. WILLIAM EDMONDS, assignee.
G.R. No. 18700 | 1922-09-26

FACTS:
 The question at issue in this appeal is, which of the two mortgages here in question must
be given preference? Is it the one in favor of the Fidelity & Surety Co., or that in favor of
Ildefonso Ramirez. The first was declared by the trial court to be entitled to preference. 
 The appellant claims preference on these grounds: (a) That the first mortgage above-
mentioned is not valid because the property which is the subject-matter thereof is not
capable of being mortgaged.
 The thing that was mortgaged to this corporation is described in the document as
follows: ". . . his half interest in the drug business known as Antigua Botica Ramirez
(owned by Srta. Dolores del Rosario and the mortgagor herein referred to as the
partnership)

ISSUE: W/N interest in business is personal property.

HELD: YES.
 With regard to the nature of the property thus mortgaged which is one-half interest in the
business above described, such interest is a personal property capable of appropriation
and not included in the enumeration of real properties in articles 335 of the Civil Code,
and may be the subject of mortgage. All personal property may be mortgage.
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LUIS MARCOS P. LAUREL, Petitioner,

vs
HON. ZEUS C. ABROGAR, Presiding Judge of the Regional Trial Court, Makati City,
Branch 150, PEOPLE OF THE PHILIPPINES & PHILIPPINE LONG DISTANCE
TELEPHONE COMPANY, Respondents.
G.R. No. 155076 (MR) | 2009-01-13

FACTS:
 Petitioner Luis Marcos Laurel, being one of the board members and corporate secretary
of Baynet Co., Ltd. (Baynet), is one of the accused in a criminal case filed by PLDT.
 The Amended Information charged the accused with theft under Article 308 of the
Revised Penal Code (RPC), by “ steal[ing] and us[ing] the international long distance
calls belonging to PLDT by conducting International Simple Resale (ISR), effectively
stealing thus business from PLDT.
 Petitioner Laurel filed a Motion to Quash on the ground that the factual allegations in the
Amended Information do not constitute the felony of theft.
 TC – denied. MR denied.
 CA – affirmed TC. Hence, this petition.
 Petitioner contends that the business of providing telecommunication or telephone
services are not personal properties under Article 308 of the Revised Penal Code.
 PLDT argues that all 'personal properties' as understood in the context of the Civil Code,
may be the subject of theft under Article 308, RPC. PLDT alleges that the international
calls and business of providing telecommunication or telephone service are personal
properties capable of appropriation and can be objects of theft.

ISSUE: W/N the business of providing telecommunication or telephone service is personal

property.

HELD: YES.
 Any property which is not included in the enumeration of real properties under the Civil
Code and capable of appropriation can be the subject of theft under the Revised Penal
Code.
 Petitioner was charged with engaging in International Simple Resale (ISR) or the
unauthorized routing and completing of international long distance calls using lines,
cables, antennae, and/or air wave frequency and connecting these calls directly to the
local or domestic exchange facilities of the country where destined. As early as 1910, the
Court declared in Genato that ownership over electricity (which an international long
distance call consists of), as well as telephone service, is protected by the provisions on
theft of the Penal Code.
 In the assailed Decision, it was conceded that in making the international phone calls, the
human voice is converted into electrical impulses or electric current which are
transmitted to the party called. A telephone call, therefore, is electrical energy. Intangible
property such as electrical energy is capable of appropriation because it may be taken and
carried away. Electricity is personal property under Article 416 (3) of the Civil Code,
which enumerates "forces of nature which are brought under control by science."
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PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, PETITIONER, VS.

ABIGAIL R. RAZON ALVAREZ AND VERNON R. RAZON, RESPONDENTS.
G.R. No. 179408 | 2014-03-05

FACTS:
 Philippine Long Distance Company’s ACP Detection Division regularly visits foreign
countries to conduct market research on various prepaid phone cards offered abroad that
allow their users to make overseas calls to PLDT subscribers in the Philippines at a
cheaper rate.
 While in UK, they bought a prepaid card – The Number One prepaid card – to make test
calls, and discovered that During a test call placed at the PLDT–ACPDD office, the
receiving phone reflected a PLDT telephone number (2–8243285) as the calling number
used, as if the call was originating from a local telephone in Metro Manila.
 Upon verification with the PLDT’s Integrated Customer Management (billing) System,
the ACPDD learned that the subscriber of the reflected telephone number is Abigail R.
Razon Alvarez, with address at 17 Dominic Savio St., Savio Compound, Barangay Don
Bosco, Parañaque City.
 They test other call cards as well, Unity Card and IDT Supercalling Card, which yield to
the same results. All foreign calls are directed to same local PLDT number belonging to
Experto Enterprises, which when traced, the occupant is still Abigail n that same address
in Paranaque.
 According to PLDT, the respondents are engaged in a form of network fraud known as
International Simple Resale (ISR) which amounts to theft under the RPC. ISR is a method
of routing and completing international long distance calls using lines, cables, antennae
and/or wave frequencies which are connected directly to the domestic exchange facilities
of the country where the call is destined (terminating country); and, in the process,
bypassing the IGF at the terminating country.
 Several Search warrants were then filed for violating PD 401.
 Respondent filed a motion to quash but was denied by the RTC.
 CA – quashed the search warrant; PLDT’s business is not personal property. MR denied.
Hence this case.

ISSUE: Is the business of telephone services can be considered a personal property that would
warrant the conviction of theft?

HELD: YES.
 This jurisprudence, in turn, applied the prevailing legal meaning of the term “personal
property” under the old Civil Code as “anything susceptible of appropriation and not
included in the foregoing chapter (not real property).” 41 PLDT’s telephone service or its
business of providing this was appropriable personal property and was, in fact, the
subject of appropriation in an ISR operation, facilitated by means of the unlawful use of
PLDT’s facilities.
 It is the use of these communications facilities without the consent of PLDT that
constitutes the crime of theft, which is the unlawful taking of the telephone services and
business.
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 Therefore, the business of providing telecommunication and the telephone service are

personal property under Article 308 of the Revised Penal Code, and the act of engaging
in ISR is an act of “subtraction” penalized under said article.
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THE UNITED STATES, plaintiff-appellee, vs. MANUEL TAMBUNTING, defendant-

appellant.
G.R. No. 16513 | 1921-01-18

FACTS:
 The accused and his wife became occupants of the upper floor of the house situated at
No. 443, Calle Evangelista, in the city of Manila. In this house the Manila Gas
Corporation had previously installed apparatus for the delivery of gas on both the upper
and lower floors, consisting of the necessary piping and a gas meter, which last
mentioned apparatus was installed below. When the occupants at whose request this
installation had been made vacated the premises, the gas company disconnected the gas
pipe and removed the meter, thus cutting off the supply of gas from said premises. 
 Upon June 2, 1919, one of the inspectors of the gas company visited the house in
question and found that gas was being used, without the knowledge and consent of the
gas company, for cooking in the quarters occupied by the defendant and his wife: to
effect which a short piece of iron pipe had been inserted in the gap where the gas meter
had formerly been placed, and piece of rubber tubing had been used to connect the gas
pipe in the kitchen with the gas stove, or plate, used for cooking. 
 Court of First Instance of the city of Manila, finding the accused, Manuel Tambunting,
guilty of stealing a quantity of gas belonging to the Manila Gas Corporation. Hence, this
petition.

ISSUE: Is gas considered as personal property?

HELD: YES.
 There is nothing in the nature of gas used for illuminating purposes which renders it
incapable of being feloniously taken and carried away. It is a valuable article of
merchandise, bought and sold like other personal property, susceptible of being severed
from a mass or larger quantity and of being transported from place to place. Likewise
water which is confined in pipes and electricity which is conveyed by wires are subjects
of larceny." 
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THE UNITED STATES, plaintiff-appellee,

vs.
IGNACIO CARLOS, defendant-appellant.
G.R. No. 6295 | 1911-09-01
FACTS:
 Defendant Carlos was a resident in a building serviced by Meralco. The building was
installed with thirty electric lights. The building was installed with an internal electric
meter. Upon inspection, it showed that the actual consumption, according to the outside
meter, was more than ten times as great as that registered by the one inside. This
difference could not be due to normal causes, since according to an electrician witness,
the extreme limit of such difference is at 5 per cent only.
 A search warrant was issued for the examination of defendant's premises. A "jumper"
was found in a drawer of a small cabinet in the room of defendant's house where the
meter was installed and not more than 20 feet therefrom.
 Ignacio Carlos was accused of the crime of theft for taking away 2,273 kilowatts of
electric current, of the value of Php 909.20 pesos , from the Manila Electric Railroad and
Light Company (MERALCO).
 The trial court convicted Carlos of theft.
 On appeal, counsel of defendant insists that the only corporeal property can be the subject
of the crime of larceny. Defendant cites several authorities showing that the only subjects
of larceny are tangible, movable, chattels, something which could be taken in possession
and carried away, and which had some, although trifling, intrinsic value, and that
electricity is an unknown force and can not be a subject of larceny.

ISSUE: Is electricity a personal property?

RULING: YES.
 Electricity is no longer regarded by electricians as a fluid, but its manifestation and
effects, like those of gas, may be seen and felt. The true test of what is a proper subject
of larceny seems to be not whether the subject is corporeal, but whether it is capable
of appropriation by another than the owner.
 Electricity, the same as gas, is a valuable article of merchandise, bought and sold like
other personal property and is capable of appropriation by another.
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PHILIPPINE REFINING CO., plaintiff-appellee vs. JARQUE, defendant-appellant

G.R. No. 41506 | 1935-03-25

FACTS:
 It appears that on varying dates the Philippine Refining Co., Inc., and Francisco Jarque
executed three mortgages on the motor vessels Pandan and Zaragoza. These documents
were recorded in the record of transfers and incumbrances of vessels for the port of Cebu
and each was therein denominated a "chattel mortgage".
 Neither of the first two mortgages had appended an affidavit of good faith. The third
mortgage contained such an affidavit, but this mortgage was not registered in the customs
house until May 17, 1932, or within the period of thirty days prior to the commencement
of insolvency proceedings against Francisco Jarque
 These proceedings were begun on June 2, 1932, when a petition was filed with the Court
of First Instance of Cebu in which it was prayed that Francisco Jarque be declared an
insolvent debtor, which soon thereafter was granted, with the result that an assignment of
all the properties of the insolvent debtor, which soon thereafter was granted, with the
result that an assignment of all the properties of the insolvent was executed in favor of
Jose Corominas. 
 On these facts, Judge Jose M. Hontiveros declined to order the foreclosure of the
mortgages on the ground that vessels are not personal properties that may be subject to
Chattel Mortgage Law.

ISSUE: Is vessel a personal property subject to Chattel Mortgage Law?

HELD:
 Vessels are considered personal property under the civil law. Since the term "personal
property" includes vessels, they are subject to mortgage agreeably to the provisions of the
Chattel Mortgage Law. Indeed, it has heretofore been accepted without discussion that a
mortgage on a vessel is in nature a chattel mortgage.
 The only difference between a chattel mortgage of a vessel and a chattel mortgage of
other personality is that it is not now necessary for a chattel mortgage of a vessel to be
noted in the registry of the register of deeds, but it is essential that a record of documents
affecting the title to a vessel be entered in the record of the Collector of Customs at the
port of entry.
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Manila Lodge No. 761 vs. Court of Appeals / Tarlac Development Corp. vs. Court of
Appeals (1976)
G.R. No. L-41001 and G.R. No. L-41001 | 1976-09-30

FACTS:
 In 1905 the Philippine Commission enacted Act No. 1360 which authorized the City of
Manila to reclaim a portion of Manila Bay. The reclaimed area was to form part of the
Luneta extension. The Act provided that the reclaimed area "shall be the property of the
City of Manila" and that "the City of Manila is hereby authorized to set aside a tract of
the reclaimed land formed by the Luneta extension ... for a hotel site, and to lease the
same, with the approval of the Governor General, to a responsible person or corporation
for a term not to exceed ninety-ninety years."
 Subsequently, the Commission passed Act No. 1657 (amending Act No. 1360) so as to
authorize the City of Manila either to lease or to sell the portion set aside as a hotel site.
 In 1911, the City of Manila applied for the registration of the reclaimed area and OCT
No. 1909 was issued in its name. The registration was subject, however, to “such of the
encumbrances mentioned in Article 39 of the Land Registration Act.”
 The City of Manila, affirming a prior sale in 1909, conveyed 5,543.07 square meters of
the reclaimed area to the Manila Lodge No. 761, Benevolent and Protective Order of Elks
of the U.S.A. (BPOE) on the basis of which TCT No. 2195 was issued to the latter. At the
back of this title (TCT No. 2195 ) was an annotation effectively granting the City of
Manila a right to repurchase the sold portion after fifty years.
 Manila Lodge No. 761, BPOE, subsequently sold the portion to the Elks Club, Inc., to
which was issued TCT No. 67488. The registered owner, "The Elks Club, Inc.," was later
changed by court order to "Manila Lodge No. 761, Benevolent and Protective Order of
Elks, Inc."
 In 1963, BPOE petitioned the CFI Manila for the cancellation of the right of the City of
Manila to repurchase the property. This petition was granted.
 BPOE thereafter sold the land together with all the improvements thereon to the Tarlac
Development Corporation (TDC). At the time of the sale, there was no annotation of any
subsisting lien on the title to the property.
 In 1964, the City of Manila filed with the CFI of Manila a petition for the reannotation of
its right to repurchase. The petition was granted. TDC and BPOE both appealed the order
of reannotation with the Supreme Court (SC). The SC affirmed the reannotation order but
reserved to TDC the right to bring another action for the clarification of its rights. As a
consequence of such reservation, TDC filed a complaint against the City of Manila and
the Manila Lodge No. 761, BPOE.
 In its answer, the City of Manila claimed that TDC was not a purchaser in good faith for
it had actual notice of the City's right to repurchase which was annotated at the back of
the title prior to its cancellation, and, assuming arguendo that TDC had no notice of the
right to repurchase, it was nevertheless under obligation to investigate inasmuch as its
title recites that the property is a part of the Luneta extension.
 The trial court (CFI) rendered its decision finding the subject land to be part of the
"public park or plaza" and, therefore, part of the public domain; consequently, the sale of
the subject land by the City of Manila to Manila Lodge No. 761, BPOE, was null and
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void. The court likewise declared that TDC was a purchaser thereof in good faith and for
value from BPOE and can enforce its rights against the latter; and that BPOE is entitled
to recover from the City of Manila whatever consideration it had paid the latter.
 The Court of Appeals concurred in the findings and conclusions of the lower court.
Hence, the parties filed petitions for review on certiorari.

ISSUE: W/N the reclaimed area is a public dominion.

HELD: YES.
 Reclaimed lot (Luneta extension) is part of public dominion, being intended for public
use
 The grant made by Act No. 1360 of the reclaimed land to the City of Manila is a grant of
a "public" nature, the same having been made to a local political subdivision. Such grants
have always been strictly construed against the grantee. One compelling reason given for
the strict interpretation of a public grant is that there is in such grant a gratuitous donation
of, public money or resources which results in an unfair advantage to the grantee and for
that reason, the grant should be narrowly restricted in favor of the public.
 Secondly, the reclaimed area is an "extension to the Luneta in the City of Manila." If the
reclaimed area is an extension of the Luneta, then it is of the same nature or character as
the old Luneta. It is not disputed that the old Luneta is a public park or plaza and it is so
considered by Section 859 of the Revised Ordinances of the City of Manila. Hence the
"extension to the Luneta" must be also a public park or plaza and for public use.
 Thirdly, the reclaimed area was formerly a part of the Manila Bay. A bay is nothing more
than an inlet of the sea. Pursuant to Article 1 of the Law of Waters of 1866, bays,
roadsteads, coast sea, inlets and shores are parts of the national domain open to public
use. These are also property of public ownership devoted to public use, according to
Article 339 of the Civil Code of Spain. When the shore or part of the bay is reclaimed,
it does not lose its character of being property for public use. (see Government of the
Philippine Islands vs. Cabangis)
 Fourthly, Act 1360, as amended, authorized the lease or sale of the northern portion of
the reclaimed area as a hotel site. The subject property is not that northern portion
authorized to be leased or sold; the subject property is the southern portion. Hence,
applying the rule of expresio unius est exlusio alterius, the City of Manila was not
authorized to sell the subject property. The application of this principle of statutory
construction becomes the more imperative in the case at bar inasmuch as not only must
the public grant of the reclaimed area to the City of Manila be strictly construed against
the City of Manila, but also because a grant of power to a municipal corporation, as
happens in this case where the city is authorized to lease or sell the northern portion of
the Luneta extension, is strictly limited to such as are expressly or impliedly
authorized or necessarily incidental to the objectives of the corporation.
 In order for property to be considered public dominion, an intention to devote it to
public use is sufficient
 The petitioners argue that, according to said Article 344, in order that the character of
property for public use may be so attached to a plaza, the latter must be actually
constructed or at least laid out as such, and since the subject property was not yet
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constructed or laid out as a plaza when it was sold by the City, it could not be property
for public use. It should be noted, however, that properties of provinces and towns for
public use are governed by the same principles as properties of the same character
belonging to the public domain. In order to be property of public domain, an intention to
devote it to public use is sufficient.
 It is not necessary, therefore, that a plaza be already construed or laid out as a plaza in
order that it be considered property for public use. It is sufficient that it be intended to be
such. In the case at bar, it has been shown that the intention of the lawmaking body in
giving to the City of Manila the extension to the Luneta was not a grant to it of
patrimonial property but a grant for public use as a plaza.
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Mercado v. The Municipal President of Macabebe, Pampanga

GR No. 37986, March 1, 1934

FACTS:
 Mariano Mercado, the former owner of the hacienda had a sort of canal excavated in
order to facilitate the cutting and transportation of firewood and other products, produced
on the said hacienda, towards the Nasi River on the east or towards Limasan creek on the
west. The said Batasan-Limasan or Pinac Buñgalun creek or canal already existed at the
time of the institution of the registration proceedings wherein judgment was rendered
resulting in the issuance of certificate of title No. 329 in favor of Romulo Mercado. When
they registered the canal for the issuance of the title, the government did not argue.
 The creek was opened not only the residents of the hacienda and those who visited it but
also some of the residents of the nearby barrios and municipalities began to use it as a
means of communication in attending to their needs.
 Then Romulo Mercado decided to convert the creek into a fish pond, thus closing the two
openings of the creek by placing dikes on both ends.
 The Secretary of Commerce ordered to have the two dikes at the end of the creek
removed.
 CFI - The creek in question is a natural navigable creek which already existed on the
said hacienda of the appellant not only long before the revolution but also from the time
immemorial. Hence, this appeal.
 According to Mercado, the creek traverses through her hacienda as described in
certificate of Title No. 329 of the registry of deeds of Pampanga, the hacienda which she
owns by virtue of donation. Batasan-Limasan or Pinac Buñgalun creek is not a
natural but an artificial creek which had been developed on his hacienda by means of
excavations made by his men on two different occasions, the former before the revolution
or during the Spanish regime, and the latter after the revolution.

ISSUE: W/N the creek is a public dominion.

HELD: YES.
 Under article 407, the Batasan-Limasan or Pinac Buñgalun creek may be considered as
belonging to the class of property enumerated in paragraph 8 thereof: 8. Waters which
flow continuous or intermittently from lands belonging to private parties, to the
State, to provinces, or to towns, from the moment they leave such lands. (Art. 407.)
 And, in addition to the foregoing, the Contentious Court of Spain (Tribunal Contencioso
de España) in a decision dated June 25, 1890, laid down the doctrine that creeks are
property of the public domain.
 And even granting that the Batasan-Limasan creek acquired the proportions which it had,
before it was closed, as a result of excavations made by laborers of the appellant's
predecessor in interest, the appellants lost their right to the creek by prescription as they
failed to obtain, and in fact they have not obtained, the necessary authorization to devote
it to their own use to the exclusion of all others. When two different interests, one being
private and the other public, are in conflict with one another, the former should yield to
the latter.
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Villarico v. Sarmiento
442 SCRA 110, 115 2004

FACTS:
 Teofilo C. Villarico is the owner of a lot in La Huerta, Parañaque City, Metro Manila
with an area of 66 square meters and covered by Transfer Certificate of Title (T.C.T.) No.
95453 issued by the Registry of Deeds, same city.
 Villarico’s lot is separated from the Ninoy Aquino Avenue (highway) by a strip of land
belonging to the government. As this highway was elevated by 4 meters and therefore
higher than the adjoining areas, the DPWH constructed stairways at several portions of
this strip of public land to enable the people to have access to the highway.
 Sometime in 1991, Vivencio Sarmiento, his daughter Bessie Sarmiento and her husband
Beth Del Mundo had a building constructed on a portion of said government land. In
November that same year, a part thereof was occupied by Andok's Litson Corporation
and Marites' Carinderia.
 In 1993, by means of a Deed of Exchange of Real Property, Villarico acquired a 74.30
square meter portion of the same area owned by the government. The property was
registered in his name as T.C.T. No. 74430 in the Registry of Deeds of Parañaque City.
 In 1995, Villarico filed with the RTC a complaint for accion publiciana against
respondents. He alleged inter alia that respondents' structures on the government land
closed his "right of way" to the Ninoy Aquino Avenue; and encroached on a portion of
his lot covered by T.C.T. No. 74430.
 TC - Petitioner was not deprived of his "right of way" as he could use the Kapitan Tinoy
Street as passageway to the highway.
 CA – affirmed TC in toto. Hence, this appeal.

ISSUE: Whether or not Villarico has a right of way to the NAA

HELD: NO.
 It is not disputed that the lot on which petitioner's alleged "right of way" exists belongs to
the state or property of public dominion. Property of public dominion is defined by
Article 420 of the Civil Code: (1) Those intended for public use such as roads, canals,
rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and
other of similar character. (2) Those which belong to the State, without being for public
use, and are intended for some public service or for the development of the national
wealth."
 Public use is "use that is not confined to privileged individuals, but is open to the
indefinite public."6 Records show that the lot on which the stairways were built is for the
use of the people as passageway to the highway. Consequently, it is a property of public
dominion.
 Property of public dominion is outside the commerce of man and hence it: (1) cannot be
alienated or leased or otherwise be the subject matter of contracts; (2) cannot be acquired
by prescription against the State; (3) is not subject to attachment and execution; and (4)
cannot be burdened by any voluntary easement.
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 Considering that the lot on which the stairways were constructed is a property of public
dominion, it cannot be burdened by a voluntary easement of right of way in favor of
Villarico. In fact, its use by the public is by mere tolerance of the government through the
DPWH. Villarico cannot appropriate it for himself. Verily, he cannot claim any right of
possession over it.
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Agripito Capitulo vs. Alejo Aquino

(Only a Court of Appeals case)

This case involves a lot owned by the City of Manila and situated around the intersections of
Andalucia, Governor Forbes and Aragon Streets, City of Manila. This lot was donated to the City
of Manila by the Sulucan Development Company exclusively for street purposes. Since its
acquisition, the City of Manila formed the project to construct thereon a traffic circle. For
reasons, however, not disclosed by the records, this project had not been carried out. Hence, it
remained vacant.

In ruling that the lot in question is property for public use of the City of Manila and not its
patrimonial property, the Court of Appeals held —

“xxx. The nature of properties owned by cities in this country

is determined by the character of the use or service for which they
are intended or devoted. Properties which are intended for public
use or for some public service are properties for public use. All
others are patrimonial properties. Art. 424, new Civil Code. It
matters not that the property is not actually devoted for public use
or for some public service. If it has been intended for such use or
service, and the city has not devoted it to other uses, or adopted
any measure which amounted to a withdrawal of the property from
public use and service, the same remains property for public use,
the fact that it is not actually devoted for public use or service
notwithstanding.”
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JEREMIAH J. HARTY, Roman Catholic Archbishop of Manila, plaintiff-appellee, vs.

THE MUNICIPALITY OF VICTORIA, Province of Tarlac, defendant-appellant.
G.R. No. 5013 | 1909-03-11

FACTS:
 On 17 January 1908, the representative of Monsignor Jeremiah J. Harty, archbishop of
the Roman Catholic Church, as the legal administrator of the properties and rights of the
Catholic Church within the archbishopric of Manila, filed a written complaint in the CFI
Tarlac against the municipality of Victoria, alleging that the parish of the said town had
been and was then the owner of a parcel of land within the said municipality, known as
the plaza of the church of Victoria; that it had acquired said parcel of land more than 60
years previously, and had continued to possess the same ever since up to 1901, in which
year the municipality unlawfully and forcibly seized the said property, claiming to be
entitled thereto and retaining it to the present day.
 On 15 June 1908, the trial court rendered judgment, holding that the parish of Victoria of
the Roman Catholic Apostolic Church, had a better right to the possession of the land
described in the complaint, and sentenced the Municipality to vacate the same and to pay
the costs. To said judgment the representative of the Municipality excepted and moved
for a new trial on the ground that it was contrary to the weight of the evidence, and he
notified the court that, if his motion were overruled, he would appeal to the Supreme
Court.
 The motion for a new trial was overruled; Hence, this appeal.

ISSUES: WON the parish of Victoria is the rightful owner of the land in question

HELD: NO.
 The SC held that the whole of the land not occupied by the church of the town of Victoria
and its parish home is a public plaza of the said town of public use.
 The Supreme Court reversed the judgment appealed from and held that the whole of the
land not occupied by the church of the town of Victoria and its parish house, is a public
plaza of the said town, of public use, and that in consequence thereof, the Municipality is
absolved of the complaint without any special ruling as to the costs of both instances.
 It may be true that the father of the witness Casimiro Tañedo, who owned the space of
land where the church and parish house were erected, had voluntarily donated it to the
Catholic Church, the only known at the time, but proper proof is lacking that the donation
affirmed by the said Tanedo comprehended the whole of the large tract which at the
present time constitutes the plaza of the town.
 Also, it should be noted that, among other things, plazas destined to the public use are not
subject to prescription
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Municipality of Antipolo vs. Aquilina Zapanta, et al.

G.R. No. L-65334 | 1984-12-26

FACTS:
 On August 8, 1977, a single application for the registration of two distinct parcels of land
was filed by two distinct applicants before the then Court of First Instance of Rizal,
Branch XV, Makati (the Registration Court, for short). One of the two applicants was
Conrado Eniceo. He had applied for registration under the Torrens system of a parcel of
land containing 258 square meters. The other applicant was "Heirs of Joaquin
Avendaño", and the land they were applying for registration was a parcel (hereinafter
called the DISPUTED PROPERTY) containing 9,826 square meters surveyed in the
name of the Municipality of Antipolo (ANTIPOLO, for short). Both parcels were situated
in the Municipality of Antipolo. The application were approved by the Registration Court
on February 26, 1980. ANTIPOLO took steps to interpose an appeal but because it failed
to amend the Record on Appeal, its appeal was disallowed.
 On May 22, 1981, ANTIPOLO filed a complaint in Civil Case No. 41353, also of the
Court of First Instance of Rizal, Branch XIII, Pasig (the CASE BELOW, for short)
against named "Heirs of Joaquin Avendaño", and their assignees (hereinafter called the
AVENDAá'O HEIRS) praying for nullification of the judgment rendered by the
Registration Court. The defendants, in their Answer, pleaded a special defense of res
judicata.
 CFI - After a preliminary hearing on the mentioned special defense, the CASE BELOW
was dismissed. ANTIPOLO perfected an appeal to the then Court of Appeals.
 CA – dismissed on the ground the ANTIPOLO had not filed its Brief within the
reglementary period. Hence, this petition.
 The claim of the AVENDAá'O HEIRS that they merely tolerated occupancy by
ANTIPOLO which had borrowed the DISPUTED PROPERTY from them, since they
had been in possession, since as far back as 1916, erroneously presupposes ownership
thereof since that time.

ISSUE: W/N the property can be subject to private registration.

HELD: NO.
 From the record, we have gathered that ANTIPOLO, for more than 50 years now, has
considered the DISPUTED PROPERTY to be public land subject to ANTIPOLO's use
and permission to use within the prerogatives and purposes of a municipal corporation.
There is indication to the effect that it had been the site of the public market as far back
as 1908, 2 or at the latest, since 1920 "up to today." 3 Gradually, additional public
structures were built thereon, like the Puericulture and Family Planning Center, the
Integrated National Police Building, the Office of the Municipal Treasurer, and the public
abattoir. Those public structures occupy almost the entire area of the land. At the time the
application for registration was filed on August 8, 1977, the DISPUTED PROPERTY
was already devoted to public use and public service. Therefore, it was outside the
commerce of man and could no longer be subject to private registration.
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 They forget that all lands are presumed to be public lands until the contrary is established.
4 The fact that the DISPUTED PROPERTY may have been declared for taxation
purposes in their names or of their predecessors-in-interest as early as 1918 5 does not
necessarily prove ownership. They are merely indicia of a claim of ownership. 6
ANTIPOLO had also declared the DISPUTED PROPERTY as its own in Tax
Declarations Nos. 909, 993 and 454.
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Dacanay v. Asistio
[G.R. No. 93654. May 6, 1992.]
En Banc, Grino-Aquino (J): 13 concur, 1 took no part

Facts:
 On 5 January 1979, MMC Ordinance 79-02 was enacted by the Metropolitan Manila
Commission, designating certain city and municipal streets, roads and open spaces as
sites for flea markets. Pursuant thereto, the Caloocan City mayor opened up 7 flea
markets in that city. One of those streets was the "Heroes del '96" where the Francisco
Dacanay lives. Upon application of vendors, the city mayor and city engineer, issued
them licenses to conduct vending activities on said street. In 1987, Antonio Martinez, as
OIC city mayor of Caloocan City, caused the demolition of the market stalls on Heroes
del '96, V. Gozon and Gonzales streets.
 To stop Mayor Martinez' efforts to clear the city streets, Teope, Pastrana and other
stallowners filed an action for prohibition against the City of Caloocan, the OIC City
Mayor and the City Engineer and/or their deputies before the RTC Caloocan City
(Branch 122, Civil Case C-12921), praying the court to issue a writ of preliminary
injunction ordering these city officials to discontinue the demolition of their stalls during
the pendency of the action. The court issued the writ prayed for. However, on 20
December 1987, it dismissed the petition and lifted the writ of preliminary injunction
which it had earlier issued.
 However, shortly after the decision came out, the city administration in Caloocan City
changed hands. City Mayor Macario Asistio, Jr. did not pursue the latter's policy of
clearing and cleaning up the city streets. Invoking the trial court’s decision, Francisco
Dacanay wrote a letter to Mayor Asistio calling his attention to the illegally-constructed
stalls on Heroes del ’96 street and asked for demolition on 7 March 1988, wrote a follow-
up letter to the mayor and the city engineer on 7 April 1988, and without receiving any
response, sought the intervention of President Aquino through a letter. This letter was
referred to the city mayor for appropriate action.
 On 3 April 1989, Dacanay filed a complaint against Mayor Asistio and Engineer Sarne
(OMB-0-89-0146) in the Office of the Ombudsman. After conducting a preliminary
investigation, the Ombudsman rendered a final evaluation and report on 28 August 1989,
finding that the Mayor’s and the City Engineer's inaction is purely motivated by their
perceived moral and social responsibility toward their constituents, but "the fact remains
that there is an omission of an act which ought to be performed, in clear violation of
Sections 3(e) and (f) of RA 3019." The Ombudsman recommended the filing of the
corresponding information in court.
 As the stallholders continued to occupy Heroes del '96 Street, through the tolerance of the
city officials, and in clear violation of the decision in Civil Case C-12921, Dacanay filed
a petition for mandamus on 19 June 1990, praying that the city officials be ordered to
enforce the final decision in Civil Case C-12921 which upheld the city mayor's authority
to order the demolition of market stalls on V. Gozon, Gonzales and Heroes del '96 Streets
and to enforce PD 772 and other pertinent laws.

ISSUE: W/N the City of Caloocan has the right to lease out portions of the public streets.
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HELD: NONE.
 The streets, being of public dominion must be outside of the commerce of man.
Considering the nature of the subject premises, the following jurisprudence co/principles
are applicable on the matter: (1) They cannot be alienated or leased or otherwise be the
subject matter of contracts. (Municipality of Cavite vs. Rojas, 30 Phil. 602); (2) They
cannot be acquired by prescription against the state (Insular Government vs. Aldecoa, 19
Phil. 505). Even municipalities cannot acquire them for use as communal lands against
the state (City of Manila vs. Insular Government, 10 Phil. 327); (3) They are not subject
to attachment and execution (Tan Toco vs. Municipal Council of Iloilo, 49 Phil. 52); (4)
They cannot be burdened by any voluntary easement (2-II Colin & Captain 520;
Tolentino, Civil Code of the Phil. Vol. II, 1983 Ed. pp. 29-30).
 A public street is property for public use hence outside the commerce of man (Arts. 420,
424. Civil Code). Being outside the commerce of man, it may not be the subject of lease
or other contract (Villanueva et al. vs. Castañeda and Macalino, 15 SCRA 142, citing the
Municipality of Cavite vs. Rojas, 30 SCRA 602; Espiritu vs. Municipal Council of
Pozorrubio, 102 Phil. 869, and Muyot vs. De la Fuente, 48 O.G. 4860). The disputed
areas from which the market stalls are sought to be evicted are public streets, as found by
the trial court in Civil Case C-12921.
 As the stallholders pay fees to the City Government for the right to occupy portions of the
public street, the City Government, contrary to law, has been leasing portions of the
streets to them. Such leases or licenses are null and void for being contrary to law. The
right of the public to use the city streets may not be bargained away through contract. The
interests of a few should not prevail over the good of the greater number in the
community whose health, peace. safety, good order and general welfare, the respondent
city officials are under legal obligation to protect. The Executive Order issued by the
Acting Mayor authorizing the use of Heroes del '96 Street as a vending area for
stallholders who were granted licenses by the city government contravenes the general
law that reserves city streets and roads for public use. The Executive Order may not
infringe upon the vested right of the public to use city streets for the purpose they were
intended to serve: i.e., as arteries of travel for vehicles and pedestrians.
 The occupation and use of private individuals of sidewalks and other public places
devoted for public use constitute both public and private nuisances and nuisance per se,
and this applies to even case involving the use or lease of public places under permits and
licenses issued by competent authority, upon the theory that such holders could not take
advantage of their unlawful permits and license and claim that the land in question is a
part of a public street or a public place devoted to public use, hence, beyond the
commerce of man. (Padilla. Civil Code Annotated, Vol. II, p. 59, 6th Ed., citing Umali
vs. Aquino, IC. A. Rep. 339.).
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EVY D. MACASIANO VS.

HONORABLE ROBERTO C. DIOKNO, MUNICIPALITY OF PARANAQUE,METRO
MANILA, PALANYAG KILUSANG BAYAN FOR SERVICE
GR No. 97764 August 10, 1992

Facts:
 On June 13, 1990, the municipality of Paranaque passed an ordinance authorizing the
closure of some streets located at Baclaran, Paranaque, Metro Manila and the
establishment of a flea market thereon. By virtue of this Paranaque Mayor Ferrer was
authorized to enter into a contract to any service cooperative for the establishment,
operation, maintenance and management of flea market and/or vending areas. Because of
this purpose, respondent Palanyag entered into an agreement with the municipality of
Paranaque with the obligation to remit dues to the treasury. Consequently, market stalls
were put up by respondent Palanyag on the said streets.
 On September 30, 1990, Brig. Gen Macasiano, PNP Superintendent of Metropolitan
Traffic Command ordered the destruction and confiscation of the stalls. These stalls were
later returned to Palanyag. Petitioner then sent a letter to Palanyag giving the latter 10
days to discontinue the flea market otherwise the market stalls shall be dismantled.
Hence, respondents filed with the court a joint petition for prohibition and mandamus
with damages and prayer for preliminary injunction, to which the petitioner filed his
memorandum/opposition to the issuance of the writ of preliminary injunction. The court
issued a temporary restraining order to enjoin petitioner from enforcing his letter pending
the hearing on the motion for writ of preliminary injunction.

Issue: Whether an ordinance issued by the municipality of Paranaque authorizing the lease and
use of public streets or thoroughfares as sites for flea market is valid?

Held:
 Article 424 lays down the basic principle that properties of public domain devoted to
public use and made available to the public in general are outside the commerce of man
and cannot be disposed or leased by the local government unit to private persons. Aside
from the requirement of due process, the closure of the road should be for the sole
purpose of withdrawing the road or other public property from public use when
circumstances show that such property is no longer intended or necessary for public use
or public service. When it is already withdrawn from public use, the property becomes
patrimonial property of the local government unit concerned. It is only then that
respondent municipality can use or convey them for any purpose for which other real
property belonging to the local unit concerned might lawfully used or conveyed.
 Those roads and streets which are available to the public in general and ordinarily used
for vehicular traffic are still considered public property devoted to public use. In such
case, the local government has no power to use it for another purpose or to dispose of or
lease it to private persons. Hence the ordinance is null and void.
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Province of Zamboanga del Norte vs. City of Zamboanga

No. L-24440

Facts:
 Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be the
provincial capital of then Zamboanga Province.
 Oct. 12, 1936 Commonwealth Act 39 (CA 39) converted the said municipality into Zamboanga
City. Sec. 50 of the Act also provided that: “Buildings and properties which the province shall
abandon upon the transfer of the capital to another place will be acquired and paid for by the
City of Zamboanga at a price to be fixed by the Auditor General.”. All in all, 50 properties were
included in this Act.
 May 26, 1949 Pursuant to CA 39, Auditor General fixed the value of the properties in question
at P1,294,244.00.
 June 6, 1954 RA 711 divided Zamboanga Province into two; Zamboanga del Norte and
Zamboanga del Sur. Zamboanga del Norte became entitled to 54.39% (or P704,220.05) of the
payment for the properties under CA 39 while Zamboanga del Sur became entitled to 45.61%.
 Secretary of Finance then authorized the CIR to deduct 25% of the regular internal revenue
allotment for Zamboanga City for several fiscal quarters in order to accredit the same to the
province of Zamboanga del Norte as payment thereof (pursuant to the CA 39 arrangement.) All
deductions aggregate to P57,373.46.
 June 17, 1961 RA 3039 amended CA 39 by providing that all the properties indicated therein
are to be transferred free of charge in favor of the Zamboanga City.
 Secretary of Finance then ordered CIR to stop further payments to Zamboanga del Norte province
and to return to Zamboanga City the sum of P57,373.46 taken from its IRA that was given to the
Province.
 The Province of Zamboanga del Norte then filed a complaint praying that RA 3039 be declared
unconstitutional for depriving the Province of its property without due process and just
compensation. It also prayed that the sum of P57,373.46 be returned to the Province and that the
City be mandated to continue its payments.
 Lower Court: declared RA 3039 as unconstitutional. Hence, the current petition brought by the
City.
 The primary question brought before the SC is W/N the properties are to be considered as
owned by the municipality in its public and governmental capacity or in its private capacity.
 The secondary question is which norm to use in classifying the properties in questions.

Held:
 We must be guided by the test: IF the property is owned by the municipality in its public and
governmental capacity, the property is public, and congress has absolute control over it. BUT IF
the property is owned in its private or proprietary capacity, then it’s patrimonial and congress has
no absolute control over it.
 PRIMARY: The former motion wins; RA 3039 is valid insofar as it affects the lots used or
devoted for public service (which is only 24 out of the 50 lots). The rest of the lots are
patrimonial, hence, not included under RA 3039 (meaning not free of charge; City should
effectuate just compensation).
o The 24 lots consist of a Capitol Site, school site, hospital sites, Leprosarium, etc.
o The 26 other slots are to be considered as patrimonial properties of the Province as they
are not being utilized for distinctly governmental purposes (they were mostly vacant
lots).
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 “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 States in favor
of the municipality.” The Court is not inclined to hold that municipal property held and devoted
for public use is in the same category as ordinary private property. The consequences are dire.
 SECONDARY: For purposes of Article 424 of the NCC, the principles obtaining under the
Municipal Law are considered to be Special Laws. Hence, the classification of municipal property
[that they are devoted for distinctly governmental purposes] as public should prevail over the
Civil Code classification [free and for the indiscriminate use by anyone].
o If the SC rules otherwise, only the school playground will be considered as public
property because it is the only property that is available for the general public. All other
will then be considered as patrimonial since they are not for public use but rather for
public service.
 Zamboanga City is hereby ordered to return to the Province the sum that was returned to it plus to
continue paying the Province’s 54.39% in its 26 patrimonial properties.


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